For many business owners, selling their company is uncharted territory. The process can be daunting and overwhelming. You can the steps below to help with making a checklist to simplify and clarify want you need to do to ensure selling your business goes successfully.

Discuss with your attorney whether you are selling a business entity or merely the assets of the business. Usually, buyers want to buy assets because the liabilities of the business do not transfer. Thus, sellers need to be concerned about any liabilities that could exist including those that may not be known for a while (e.g. future lawsuits or government audits for past business practices).

Business Documents

  • If your business is a corporation, have your attorney assist with a corporate resolution that authorizes the sale of the business.
  • Ensure the sale is compliant with any termination rules set forth in your Articles and Bylaws.
  • If your business has multiple owners, ensure all the owners have signed off on the sale of the business.
  • Have your attorney ensure the sale is compliant with any Articles of Organization and bylaws.
  • Consider whether you have personally guaranteed any liabilities of the business with third-parties (e.g. bank, vendor, etc.) and negotiate a release of those from those.
    • If you are selling the name of your business, make sure you prepare legal documents that will give the new owner rights to use the name.

Tax Documents

  • Prepare all required government tax documents on both the state and federal level.
  • Prepare necessary tax documents for transferring company-owned vehicles.
  • Complete IRS Form 8594 (required by both the buyer and the seller). The form must show an identical allocation of the purchase price.

Financial Documents and Asset Transfers

  • Final Purchase Price Negotiations: At a minimum, make sure there is agreement on the following:
    • The price for prorated rent, utilities, and other fees;
    • Agree on the value of any remaining inventory (if any);
    • Agree on a price all outstanding accounts payable and accounts receivable, and/or set up a contingency to cover these costs.
  • Ensure Insurance documents have been transferred or set to cancel.
  • Determine what furniture and equipment will be included in the sale and what will be removed from the property and kept or sold off separately.
  • Prepare loan documents such as these examples:
    • Promissory Notes,
    • Security agreements from the buyer (including any guarantors),
    • UCC financing statement to be filed with your state (if required).
  • Prepare succession agreements for employee benefit plans, profit sharing, flexible spending, and bonus schedules.

Government Notifications

  • Update the Secretary of State’s Office about changes to the LLC ownership/dissolution and/or corporation changes.
  • Update the IRS if the company ownership changed (not needed for asset transfers).
  • Update the Department of Revenue if the company ownership changed (not needed for asset transfers).

Property Documents

  • Prepare lease transfer agreements for any leased property.
  • For corporations and LLCs, update the contact agent for the leasing company.

Telecommunications; Internet and Website Management

  • Determine if the phone number will follow the company, and if necessary, update the contact information with the phone company.
  • Cancel all phone numbers that will not be remaining with the company or transfer them out of the company’s name.
  • Send out notices for changes in contact information if necessary.
  • Determine if the phone, utilities, Internet Service Provider, and other third-party contracts will remain the same; at a minimum, give them contact information for the buyer.
  • Assign someone to take over the website.
  • Update ownership and contact information for the domain name and website vendors.
  • Make any relevant changes to services offered and changes in mission statements.

Communicate with Personnel

  • Let employees know if you will remain on as a consultant or manager and what your new role will be.
  • Notify personnel of any management changes.
  • Provide any letters of recommendation to employees who will be losing their jobs as a result of the sale.
  • Make sure employees who will be remaining will have full knowledge of impending policy and procedure changes, if known or expected.

Outstanding Work

  • If there is any outstanding work product that will transfer to the new owners, make sure customers will be notified of any impact on them.
  • Determine who will be responsible for any financial loss as a result of outstanding or back-ordered work.

Closing Documents

  • Have your attorney draft a bill of sale to be signed by all parties.
  • Have your attorney draft closing documents, which contain the following:
    • Purchase price,
    • Price adjustments to be paid or credited to either party,
    • The total purchase price after all adjustments and credits are determined.