GETTING YOUR BUSINESS READY FOR SALE
If you are planning to sell your business, there are several steps you should take to make sure your corporate house is in order and get your company ready for sale. If you don’t prepare ahead of time, you risk significant delays in closing the transaction and even losing a potential buyer. Here are a few tips to help you avoid problems:
- Bring the minute book of the company up to date. When selling shares, the buyer’s lawyer will likely ask to inspect the minute book of the corporation to ensure that it is up to date, that you are registered as the proper owner of the shares to be sold, and that such shares have been properly issued to you or transferred to you. You should also prepare corporate resolutions or bylaws.
- Ensure legal agreements with third parties are all in writing and duly executed. When selling assets, third party consents may be required from landlords, suppliers, customers, employees, agents, equipment lessors, licensees, etc. Ensuring that such business relationships are properly documented in writing prior to the buyer conducting its due diligence can be the key to a successful asset sale.
- Clean up the balance sheet. You should resolve open receivables, selloff obsolete or excess inventory and take other steps to avoid concerns with your balance sheet.
- Address any potential third party claims on your property. The buyer’s lawyer will typically perform a variety of searches against your corporation and against you personally in the case of a share sale. These include lien searches with the New York Secretary of State to see if there are any liens registered against the seller’s or the corporation’s assets and searches relating to bankruptcy and lawsuits. Other searches may also be performed, such as searches of the recorder’s office and credit reports.
Remember the buyer’s lawyer will uncover problems with your business so it’s best to address them before you put your company on the market.
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