If you plan to go to market to try to find a buyer, you will need enough lead time to address the relevant issues so the time to start is now. If things are not well organized it can delay the process which may mean that windows of opportunity close or tax advantageous deadlines are missed. If you receive an unsolicited approach, if key financial information is not readily accessible and in A-1 order, it may create the wrong impression. Once the process starts, the ability to maintain momentum is an important part of closing the deal; inadequate information that causes delay merely increases the chance for buyer's remorse to set in.
A simple income statement and balance sheet will not show your business at its best. For example, you will be asked detailed questions about a variety of aspects of your business, including inventory, revenue streams, sales by customer, profitability (overall and by product/activity) and future forecasts. None of this can be cobbled together at the last moment.
There can often be items reflected in your financial statements that would be better cleaned-up before a potential buyer starts looking at things too closely; a classic example is "family expenses." Consequently, financial statements may need to be "restated" in order to exclude items that will not be relevant to a buyer.
Many key business relationships are often not recorded in writing at all or sometimes only partially. A sale transaction may have significant implications for many of these arrangements and, if not all the terms are clear, this can cause confusion.
What is included or excluded? Do you intend to sell all of the assets that are on the balance sheet? Have you got a handle on all of your trademarks? Have they all been registered (where possible) or renewed (where applicable)? If you are using a trademark with permission, is there a proper agreement regarding use and transfer? Are there assets that are supposed to be included in the deal but which are not on the balance sheet?
Are you in compliance with applicable laws that relate to your business? Do you have all the permits you are supposed to have? Are all County/City use permits being observed? Would you stand up to an immigration I-9 audit?
If there are assets that you do not intend to sell, make sure you have a clear understanding of what those are and how they can best be kept out of the deal. Remember, there can often be a tax consequence of removing assets from a business. The buyer's expectations as to what is/is not included need to be properly managed.
The week before closing is typically not a good time to start tax or estate planning. These issues need to be thought about well in advance and before there is third party validation of the potential fair market value of your business or its assets.
The buyer will want to ensure a smooth transition and hand over of the business. Are you expecting to continue to be involved? Does the buyer expect you to stay on? If you have other plans, might they conflict with the buyer's expectations? What about your key employees – how might they react?
You should always have some idea of what your business is worth or might fetch if properly marketed. If you are trying to maximize that value, since there are many components to value, you should concentrate your efforts and resources on those that have the best payback. These will vary from business to business. Aim to understand what makes most sense in your particular case.