Are You Ready to Sell Your Business? How to Keep the Dream of Selling Your Business From Becoming a Nightmare
June 28, 2019
For many California business owners, there comes a time to consider selling. However, even if you are ready to hand over the reins, your company must also be in good shape. You can trust a California business law attorney for assistance with the planning and details, but check out some keys to ensure you get top value and make the transaction as smooth as possible.Organized, Accurate Financial Records
Among the most important factors to success in selling a business is being able to present accurate, streamlined financial records that are in strict compliance with generally accepted accounting principles. The best way to achieve this objective is to build your company’s financial history on a regular, continuous basis over time, rather than trying to create it just as you go to sell. A company with consistent, easily reviewable documents is more attractive to buyers because it minimizes risk – potentially leading to a higher price.Current, Verifiable Company Records
A buyer will require you to execute warranties stating that all company records are:
- Accurate with respect to the business owners and organizational documents;
- Current on incorporation requirements, bylaws or operating agreement, and in good standing with the California Secretary of State’s Office;
- In compliance with all government and administrative regulations – at the state, federal, and local level as applicable.
In addition, you should ensure that you have copies of all internal documents regarding company policies and guidelines. Having your company records in good order before selling allows you to reduce or eliminate future liability for non-compliance.Proper Management of Company Intellectual Property
Many business owners do not realize that intellectual property is an asset much like real estate or other property. It must be properly organized and registered, and strictly monitored, to protect its value to the company. Another oversight for some stakeholders is not realizing the wide range of assets that fall under the umbrella of intellectual property, such as:
- New, innovative technology;
- Your online presence;
- An extensive, loyal social media community;
- Trademarks, trade dress, and copyrights;
- Customer lists; and,
- Many others.
It is important to review, itemize, and identify all intellectual property assets well in advance of a sale of your business – even better, throughout the lifecycle of your company. Doing so will enable you to address infringement issues, make changes to registrations, or take other action to protect your ownership interests.Solid Policies Regarding Employees
Do not overlook the importance of maintaining and organized, current set of records regarding your employees. It is wise – and also required by law – to keep such documents as:
- Compensation and benefits;
- Employee equity ownership;
- Policies regarding hiring and termination;
- Current employment contracts; and,
- Many other records that impact a potential buyer’s rights and responsibilities regarding workers.
Along with these tips on selling your business, solid legal representation is critical. For more information, please contact the Sacramento Law Office of Kristina M. Reed at 916-492-6033 or via our website. We can offer additional advice after reviewing your objectives and the details of your business.