small business sale checklist

Small Business Sale Checklist

While selling your business may seem overwhelming, it’s essential elements include 3 key requirements: 1). Know your business value, document the basis for that business value (why is the business that value) and why the business owner is selling. It is possible to accomplish this by following three key requirements.

Preparation is key to the timing of the sale.

A comprehensive checklist can help you succeed in selling your business. It is not a good idea to list your business for sale at a too high or low price. If the interest is not shown in your business after you have listed it for sale, it’s an indication that your value is too high.

People shouldn’t be able to drive by your business or view it before you are ready. While you are trying to run the business, it is important not to get bogged down answering questions.

These are some steps to help you prepare your small business sale checklist.

Get a professional valuation of your business. An overpriced business is hard to sell. It an also backfire to overprice your business as potential buyers might be curious as to why your business has been on the market for so long.

You will need documentation to prove that the asking price is reasonable. Financial statements and lease agreements are essential. (See the following for a complete listing.)

Establish a prequalification system. Buyers who are serious will want to do their research and review documentation. Tire kickers don’t need financial information about your business.

Selling a business checklist: 20 key considerations

1. Professional advisors

Every member of your sales team matters. Each member of your sales team can offer information and assistance to potential buyers. A great team will allow you to focus on running the business. The checklist’s first step is to build a team. It is directly linked to success.


You may be sole proprietor and do your own financial records. It is important to hire an accountant when selling a business. It is important to provide financial information in a professional way. All outstanding accounts receivables should be updated.


Many attorneys are experts in a particular type of law. Some attorneys are experts in commercial sales. They are familiar with the issues that could cause problems and know how to simplify the process.

Business Broker

A business broker is required unless you are selling a company to a family member or employee. Yes, you will have to pay a commission. The commission for sales less than $1million will be around 10%. A business broker is a commercial and real estate specialist who stays on top of the latest trends and knows about potential buyers and sellers

2. Reason for sale

A written explanation of the reason for the sale should be prepared. Common reasons for a small business sale are:

  • Retirement
  • Relationships with partners/investors are not working
  • Family illness or sickness of the owner
  • Owner must move
  • Other business/professional interests

3. Business licenses and contracts

It is important to organize this information in a proactively. Determine your lease agreement start and end dates. Determine if you are required to create assignments. When a business sale is in progress, it can take time to resolve license and contract issues. Some examples:

  • Are you a corporation or a business? It may be necessary to dissolve the business as part of the sale.
  • Did the bylaws of the business contain termination rules when they were created?
  • Is there more than one owner? Each owner must agree to a sale.
  • Are there any licensing agreements?

4. Business records

This step by far can seem the most daunting part of your small business sale checklist. can seem daunting. Once it’s organized, however, it really helps move the needle towards a successful business sale. You can present your records as a thorough and informative packet to pre-approved buyers. If well done, your business listing packet can help a deal move forward faster. Your business lising packet should include:

  • Business documents. These documents are the essentials that describe how businesses work:
  • Equipment and facility maintenance agreements can include vehicles, factory machines and copiers.
  • Written business plan – describes your business from its inception to the present. It should contain a description of the business operations and future plans.
  • Marketing plan – How to promote your business
  • Contracts with existing customers and suppliers – If raw materials are required to make your product you must prove that they are available. List any customers that have signed long-term contracts for goods and services.
  • Price list for product – If necessary. Include price lists that show any changes in the past if your business produces a product or products for many years.
  • Tax Documents

Persons or entities that are buying businesses will do their due diligence and gather all necessary information. When selling a business, it is a requirement that you provide tax documents (usually federal and state for three years) and profit and loss statements. Additional documents for the packet include:

  • Seller’s discretionary earnings. These are non-essential expenses. These items can be avoided by a new owner, who may choose to spend less or not spend as much. Your accountant/you can look at tax returns to move them, which will help increase the bottom line.qTravel expenses
    • Vehicle – If an owner owned a company vehicle.
    • Customers entertained
    • Advertising and marketing campaigns
    • Workers get perks
  • Financial Statements. These statements are an annexe to the tax return information. They are part of due diligence. It is important that the buyer knows if credit agreements will still be honored. It is also important to find out if creditors will be paid as part of the sale.
  • Credit agreements – A supplier might extend credit for raw material.
  • Creditors: This can include information on loans for business equipment, software, and other property. This can also include equipment and property leases.
  • Accounts Receivable – This information is useful for the buyer to understand the cash flow of the company. This information allows the buyer to see how much money is available.
  • Intellectual Property Documents. These documents are essential for ensuring that everything is done correctly. The sale process is not complete without intellectual property documentation. A commercial and business lawyer who is familiar with intellectual property documentation requirements can be a great value.
  • Notifications from the Government. Notification must be given to the secretary of state about any sale or change in ownership of an LLC. Both the IRS and Department of Revenue must be updated.
  • Legal documents
  • Employment contracts. This is crucial. Is it necessary for the new owner to retain existing workers?
  • If the property is also being sold, also include the physical legal description of the business property, including property boundaries and deed description.
  • List of stockholders and shareholders. Did the IRS ever audit the owners of the business? Add that information to the results.
  • Whether there are any pending lawsuits against the business or owners? Never conceal the business’ liabilities as that may well constitute fraud.
  • Documentation about the company registration and any permits or licenses required.
small business sale checklist

5. Insurance requirements

Take a list of all insurance policies and policy numbers that are connected to your business. Examine the coverage periods as part of your small business sale checklist.

Some buyers may choose to keep the same insurance company or carriers. You will be responsible for cancelling coverages no longer required. Don’t call to cancel if a closing date has already been set. You don’t want coverage if you are not covered by insurance.

6. Business assets

There are many assets for businesses that can be seen. You can see an office, equipment, warehouse, factory, fleet of vehicles and many other assets. There are financial aspects of the business that can’t be seen. These are called intangible assets. You should also include documentation regarding intangible assets when you list assets.

  • Intellectual property – Do your trademarks, logos, patents, licensing agreements, or trademarks include intellectual property?
  • Customers – How many loyal clients does your company have?
  • Business Name Brand – How many years has your company been in existence under this name? Let potential buyers know the strength and reputation of your business.

7. Inventory list

It is essential to have an inventory list as part of your small business sale checklist. Both you & your buyer can identify what items are in the business. This list can include furniture, office/factory equipment, raw materials, and product inventory. All of these are business assets.

8. Business operating manual

A prospective buyer should be familiar with two areas: the employee handbook and employee benefit plans. Information about benefits plans includes information about health insurance and retirement accounts. There may also be earned bonuses for employees.

9. Supplier contracts

Many companies have agreements with businesses that supply goods and services. A business might contract with a cleaning service or a machine shop to get parts.

These contracts must be honored by the buyer This requirement might be stated in existing contracts. Contracts may have an end date. The buyer might want to extend the contract proactively.

10. Waste disposal

A company might deal with dangerous chemicals or other materials such as gas and oil. It could produce large quantities of cardboard or waste paper. Are employees able to recycle plastic and paper?

What is the company’s plan to dispose of all the waste it produces? A waste disposal plan should be in place for the business. Buyers should do their due diligence to find out about the business’s waste disposal methods. This should be discussed with the buyer as part of your small business sale checklist.

11. Environmental audit of the business

An environmental auditor is trained in reviewing a business to ensure compliance with environmental guidelines. If an environmental audit is part of your small business sale checklist, an environmental auditor may examine:

  • Are there any environmental permits for the business?
  • Are they current and due for renewal?
  • Is the company in compliance with all environmental regulations?
  • Are there remediation orders?
  • Is remediation ongoing?

12. Information technology of the business

Another essential business sale key of your small business sale checklist is to take a look at your business’ security of information and technology systems. Prepare a relevant audit of all programs and assure that software is up to date and there are data backups for all program. Prepare a list of all log in credentials for the buyer and assure that the everything effectively transfers to the buyer for all digital products and services necessary to run the business.

  • Make sure to keep track of all software used to pass to the new buyer
  • Share all passwords & credentials
  • Update ownership and contact information to software hosts and websites.
  • Take a look at domain renewal dates
  • Find out when software renewals are due. Create a list of the new owners.

13. Business licenses & permits

A business can be closed if it does not have the correct permits or licenses. A comprehensive list is required for a new owner. This can include:

General license

Registration of taxes

Health permits

Occupation licenses issued by the state

Liquor license

Lotto license

Reseller’s License

Zoning and permits for land use

Health department permits

14. Notify employees

Any changes in ownership will be a concern for employees. Employees should be informed early in the process of selling their property.

This step is often the most difficult in your small business sale checklist. The true assets of small businesses are their employees, both tangible and intangible. These employees should be valued. Consider the following:

  • Will they be able to keep their jobs if the business is sold?
  • What will happen to the company’s operations and/or policies?
  • Will the current owner send letters of recommendation to employees if they lose their jobs?
  • Will there be any changes to earnings?
  • Will there be any changes to benefits?
  • Are there any outstanding employee legal claims, e.g. workers’ comp, wage & hour?

15. Outstanding projects

Is there any production orders or projects that haven’t been completed? When is the completion of these contracts expected?

Buyers can view outstanding projects as liabilities, especially when there is a problem. For example, a job might be delayed because of problems with suppliers. If the seller is proactive in explaining what’s happening to complete the contracted work or service, liability can be reduced.

16. Exit strategies

Business owners should consider their exit strategy before signing a listing agreement with a business broker. What tax implications will selling your business have? When is the best time to sell your business? If you decide to sell your business, where is the best place for the money?

Your financial advisor is an important advisor in your business sale. Your financial advisor should be consulted early on, prior to listing your business, to help you determine tax implications of the business sale proceeds and the best use of your proceeds from your business sale.

17. Confidentiality agreements

Two types of confidentiality agreements will likely be required as part of your small business sale checklist:

  1. Before you sell. This agreement protects you against buyers who might misuse financial or confidential information about your company.
  2. After the sale. Do you want certain aspects of the deal to remain private? Perhaps your reasons for selling your business are personal or a family matter.

18. Purchase agreement

The final step in the business sale process is the purchase and sale agreement document. You can break down the purchase and sale into smaller parts that can protect both of you. The purchase agreement is one of the last steps in your small business sale checklist. This agreement will be signed by both you and the business buyer.

19. Closing documents

Both parties must sign all closing documents. Commercial sales may take place face-to-face but more commonly, transactions are done via Zoom or other similar technology. Although the transaction will involve the same people – seller, buyer, broker, and attorneys – they are often not present in the same place when it is signed.

20. Qualifying the buyer

Another essential key for your small business sale checklist, is to qualify your buyer. Business sellers may and should conduct due diligence to determine the net worth of the buyer and determine if they can fulfill the agreement.

It’s important to do due diligence when selling your business. Determine whether the buyer is able to pay for the purchase of your business. You don’t want the deal to crash in disappointment if the buyer does not have the financial resources to purchase the business.

Documents necessary to start the process

The following are essential documents that you will need to prepare when you are selling your business and organize your small business sale checklist. Before you meet with a business broker, attorney, financial planner or accountant, organize these essential documents for their review to help guide you:

  • Tax returns – Businesses should submit tax returns for the last 3 years
  • Most recent Profit & Loss (P&L) statement
  • Lease agreements – These are used to lease equipment, vehicles, and property.
  • Employee information
  • Property information (if selling)
  • Business entity information
  • Environmental information
  • Licenses (i.e. business, health department, liquor, etc.)
  • Partnership agreements if any

A business broker is essential to help you organize documents and prepare your business for sale. They can further guide you on your small business sale checklist. Whether you are doing a public sale or private sale to family or employees, a business broker is invaluable in guiding the process, determining the value of your business and avoiding foreseeable pitfalls.

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