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Preparing Your Business for Sale
Russell L. Brown




Table of Contents
  • Foreword
  • Introduction

Chapter 1: Why You Need to Prepare Your Business for Sale

  • Introduction
    • Definition of a Small Business
    • Incorporated Versus Non-Incorporated Businesses
    • Business Size Considerations
    • A Word About the Strategic Moves

  • The Types of Business Buyers
    • Financial Buyers
    • Strategic Buyers
    • Family Buyers
    • Partner, Shareholder, and Employee Buyers
    • Industry Buyers

  • The Buyer Most Likely to Buy Your Business

  • Methods of Sale for Your Business
    • Sale to a Private Party
    • Sale/Transition to a Family Member
    • An In-House Management Buyout (MBO)
    • Sale to Your Employees Through an ESOP
    • Mergers and Acquisitions (M&A)
    • Public and Private Corporate Stock Sales
    • Leveraged Buyout

  • Preparing Yourself for Selling Your Business
    • Identify Your Reasons for Selling the Business
    • Prepare Yourself Emotionally for Your Business Sale
    • Plan to Stay With the Business for a Time After the Sale

Chapter 2: What Is Your Business Really Worth?

  • Introduction
    • Rules of Thumb for Business Valuation
    • Establish a Benchmark Valuation

  • Business Valuation Methods
    • Asset Based Valuation
    • Market Comparison Valuation
    • Present Value (PV) of Future Earnings Valuation
    • Capitalization of Current Net Earnings Valuation (CAP)

  • Reconstructing the Income and Expense Statement for Valuation

  • Applying the CAP Valuation

  • Selecting a Valuation Method

  • Timing Is Everything

  • Finding Value in a Business Without Net Income
    • Selling a New Business
    • Selling a Turnaround Situation

Chapter 3: Enhancing the Sales Value of Your Business

  • Introduction

  • Maximize Your Operating Profits

  • Streamline Your Financial Operating Ratios

  • Improve Business Income and Minimize Expenses
    • Evaluate All Leased and Financed Assets for Conversion to Owned Assets
    • Evaluate All Ongoing Service and Material Contracts and Agreements
    • Evaluate the Business's Physical Plant
    • Evaluate Your Employee Costs
    • Evaluate All Office Equipment and Computer Software
    • Evaluate All Production-Related Equipment
    • Evaluate All Owner-Specific "Perks" and Benefits
    • Review All Products and Services

  • Other Enhancements You Can Make

  • Anticipate Buyer Concerns

  • Give a Buyer a Good Reason to Buy

  • Properly Organize Your Company

Chapter 4: Financial and Tax Consequences of Selling Your Business

  • Introduction

  • Financial Considerations
    • Cash Required at Time of Closing
    • Personally Financing the Sale
    • Financing with Promissory Notes
    • Taking Corporate Stock in Payment
    • Taking an Earn-Out
    • Third-Party Financing

  • Tax Considerations
    • Business Sale Structure Relative to Your Estate Plan
    • Recapture of Depreciation
    • Asset or Corporate Stock Sale
    • Installment Sale
    • Converting a C Corporation to a Sub-Chapter S Corporation
    • Sole Proprietorship Versus a Corporation
    • Capital Gains Versus Ordinary Income
    • Estate Planning

  • Real Estate Considerations

Chapter 5: Succession Planning for the Family-Owned Business

  • Introduction

    Personal Issues
    Giving Up Control
    Facing the Inevitable
    Capability of Your Children
    Multiple Children and Leadership
    Other Heirs
    Inadequate Funding
    Resolving the Problem

  • Strategic Issues

  • Financial Issues

    Developing a Succession Plan
    Developing a Strategic Transition Plan
    Developing an Estate Plan

  • Developing a Financial Transition Plan
    Life Insurance
    Personal Savings
    Installment Purchase
    Bank Financing
    Corporate Stock Sale

  • Succession Plan Checklist

Chapter 6: Choosing Professional Advisors and Sales Representatives

  • Introduction

  • Selecting an Attorney

  • Selecting an Accountant
  • Selecting a Financial and Estate Planner

  • Selecting a Professional Sales Representative
    • Selecting a Business Broker or M&A Specialist
    • Selecting an Investment Banker

  • Obtaining an Independent Business Valuation

  • Involving Your Commercial Banker in the Sale

Chapter 7: Putting It All Together: Preparing an Exit Plan

  • Preparing an Exit Plan
    • Exit Plan Key Points Checklist
    • Make the Decision to Sell
    • Identify the Most Likely Buyers
    • Identify the Most Likely Method of Sale
    • Establish the Time Frame for the Selling Process
    • Take Action to Enhance the Sales Value of Your Business
    • Business Value Enhancement Checklist
    • Special Considerations for Business Real Estate Leases
    • Select and Assemble Your Team of Advisors and Representatives
    • Determine the Price Range and Your Conditions of Sale
    • Establish Key-Person Employment Contracts
    • Communicate Your Intention to Sell

  • Composing Your Company Overview, Financial History, and Forecasts
    • The Company Overview
    • Financial History
    • Financial Forecasts

  • Assembling "The Book"

  • Accelerating the Sale Preparation Process

  • Marketing, Negotiating, and Selling

  • Managing Your Sale Proceeds

Chapter 8: Resources for Preparing Your Business for Sale

  • Introduction

  • Business Brokers

  • Mergers and Acquisitions (M&A) Specialists

  • Investment Banker Resources (Large Firms)

  • Investment Banker Resources (Mid-Range Firms)

  • Internet Sites for Buying or Selling a Business

  • Employee Stock Ownership Program (ESOP)

  • Financial and Estate Planning Professionals

  • Succession Planning Organizations

  • Business Valuation and Asset Appraisers

  • Business Valuation Data and Information

  • Initial Public Offering, SCOR, and DPO






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