Use a Due Diligence Checklist to Sell Your Company
November 11, 2013
Even the owners of successful companies may decide to sell at some point. Retirement or switching directions into new industries can create a need to sell your business and get a lump sum of money to help you move on. To be sure of proper valuation of a company and to facilitate the sales process, use a due diligence checklist before the sale.
What is a due diligence checklist? This list, created specifically for buyers and sellers of business entities, includes every document and piece of information that must be present or taken into account during the sale. It consists of a number of different sections.
“Organization and Good Standing” includes such things as business licenses, lists of shareholders, DBA names and bylaws.
“Financial Information” includes creditor and analyst reports, any audits, capital strategy and account schedules.
The next sections on the due diligence checklist outline required documentation for physical and intellectual assets, employee lists and benefits, and any licenses and permits the business holds. Important information like environmental reports, tax information, and all contracts, product lines and customer data should also be available when you sell your company.
All of the information and documents listed on the due diligence checklist help you create a reasonable valuation of a company and sell more quickly by creating transparency for the potential buyers. They need to know exactly what they are getting if you want a good bid or a quick sale. Revealing all this data at the start can help prevent problems later on, which can result in the sale not going through.