One of the fundamental steps of selling a business is providing a potential buyer with due diligence documents at their request. However, as the seller, your effort in developing these documents should begin long before you receive the buyer’s initial due diligence request list. In this post, we’ll discuss due diligence from the seller’s perspective, what to expect, and how to deliver comprehensive documentation that is accurate and reflects your business’ strengths.
Anticipate Your Buyer’s Needs
Long before you ever reveal your desire to sell your business, you need to think about what a potential buyer would ask for before closing the deal. The easiest way to anticipate buyer needs is to consider what you would want to see if you were purchasing your business. The most common documents that potential buyers request include:
- Corporate organization and governance information
- Financial documents (Balance sheets, cash flow reports, income statements, etc.)
- Tax documents
- Existing contracts (employees and suppliers)
- Existing Non-Disclosure Agreements
- Existing and future legal obligations
- Outstanding judgments and tax liens
- Health and environmental documentation
- Asset inventories
- Stock information
- Valuation documentation
Depending on the type of business you are selling, there may be many other types of documentation you will need to provide.
Draft Documents to Identify Weaknesses
Once you’ve identified the documents your potential buyers are most likely to request, it’s time to actually draft up those documents to see what your business will look like “on paper”. Once these drafts are finished, review them thoroughly to identify areas of weakness. Make a list of all of these identified issues, ordered by priority or impact on the future sale.
Make Corrections to Strengthen Core Operations
Use the list you’ve created of potential business weaknesses to make improvements and corrections to your business operations. Update your draft documents as efficiency improves and expenses decline. Give yourself an appropriate amount of time to make the corrections your business needs so you can sell for top dollar.
Get Expert Advice
If you’re selling a business in Tampa Bay, you don’t have to go through preparing due diligence documentation alone. The experts at Tampa Business Broker Inc. have helped draft due diligence documents for businesses big and small in various industries. We know what to consider when anticipating buyer needs, have resources developed to make drafting documents a breeze, and can offer advice to strengthen your business reports and portray your company as the gem you know it is. Contact us at 813-548-5876 or visit https://www.tampabusinessbroker.com/ to see all the services we offer business sellers in Tampa.
