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Step-by-step guide for selling a business

We at First Choice have created a simple guide throughout the entire selling process. This step-by-step walkthrough was designed from the ground up to deliver, in a clear way, what to expect when selling your business. Regardless if you have been selling for years or if this your first business to sell, this guide has something for you.

Table of Contents

  1. Getting Started
  2. The Selling Process
  3. What Documents Do You Need?
  4. Terminology
  5. The First Choice Way

Getting Started

So you decided to sell your business. Well Congratulations! You have made the first step in successfully selling your business.

Most first-time business owners don't know how to sell their business, how to price it correctly, and how to get buyers interested without losing confidentiality. No worries! We have spent over 20 years being the world's leader in selling businesses. This guide is to increase your know-how and get started on the right foot.


The Selling Process

Most of the research that we have done when creating this process boils down to people getting conflicting information from an array of different sources, leaving the reader just confused and irritated. Selling your businesses should be easy and straight-forward, not challenging or daunting. This is why we have created this guide that puts things in five simple, easy steps. These steps were designed with you, the seller, in mind.

Here are the five steps from the Selling Process

  1. Maintain Operations
  2. Value the Business
  3. List in Confidence
  4. Buyer/Negotiation
  5. Post Transaction
These simple steps go from beginning to end on the entire seller's journey. Easy.

 

What Documents Do You Need?

During the Selling Process, you are going to need several documents that accurately presents your business to potential buyers. Here is a complete list of all the documents that you need in order to sell your company effectively:

  • Profit & loss statements for the current and past 2-3 years
  • Current balance sheet
  • Cash flow statement
  • Business tax returns for the past 2-3 years
  • Copy of the current lease
  • Insurance policies
  • Non-disclosure/confidentiality agreement
  • Personal financial statement for the buyer to complete
  • Executive summary or overview of the business
  • Detailed profile describing the business
  • Any additional documentation to substantiate the financial representations
  • Professional certificates
  • Supplier and distributor contracts
  • Employment agreements
  • Offer to purchase agreement
  • Note for any seller financing

This may seem like a lot at first, but it is better to know what you need and start gathering the documents now instead of waiting until the last moment. Buyers move quickly and if you do not have the necessary documents ready, then they could potentially pass up your business for another.

Terminology

There are plenty of Acronyms in the Broker world that we commonly use.

Common Acronyms (from FCBB admin guide)
APA – Asset Purchase Agreement
BLI – Business Listing Information sheet (no NDA required)
BSOC – Bulk Sale Opening Checklist
BS – Balance Sheets
CBP – Confidential Business Profile (CBP Level 1 has all business information without business name or address. CBP Level 2 has business name and address along with additional business details - CBP Level 2 is only provided after proof of funds)
CBQ – Confidential Business Questionnaire Clause Manager – Located in OMS left side menu bar, provides clause writing framework and common clauses used in APA’s and LA’s
CLI – Confidential Listing Information sheet (NDA required)
CRM - Customer Relationship Management (FCBB endorses Streak)
DD - Due Diligence
ELA – Exclusive Right to Sell Listing Agreement (more commonly referred to as LA)
FF&E – Furniture, Fixtures and Equipment
ICA – Independent Contractor Agreement
ILI – Internal Listing Information sheet (for listing agent/broker only)
NDA – Non-Disclosure Agreement (same as Buyer Confidentiality Agreement, also referred to as “Confid”)
NLIDS – New Listing Data Input Sheet (aka, Input sheet)
OMS – Office Management Suite (FCBB proprietary office management system)
P & L – Profit and Loss Statement (aka, financial statements or income statement)
PEG – Private Equity Group - referred to as PEGs
SBD – Sold Business Details
SDEWS – Seller’s Discretionary Earnings Worksheet (some refer to as SDE or SDEW)
SOS – Secretary of State List of Officers
TR – Tax Returns
YOY – Year Over Year (typically used on Add Back worksheet and income statements)

The First Choice Way

First Choice Business Brokers is here for you through the entire selling process. To proceed with working with our experienced brokers, here is a quick snapshot of what happens next:

  1. Meet with one of our trusted brokers for a valuation of your business
  2. Sign a seller NDA so you have peace of mind as our staff handles your business information
  3. With one of our brokers, fill out a listing kit which may include a
    CBQ Confidential Business Questionnaire Clause Manager – Located in OMS left side menu bar, provides clause writing framework and common clauses used in APA’s and LA’s
    ,
    CLI Confidential Listing Information sheet (NDA required)
    ,
    FF&E Furniture, Fixtures and Equipment
    ,
    NLIDS New Listing Data Input Sheet (aka, Input sheet)
    , and
    YOY Year Over Year (typically used on Add Back worksheet and income statements)
  4. The listing kit will be signed either in person or via Docusign
  5. Be prepared to provide the following: business permits/licenses, P & Ls for 3 years?
  6. Your business will be listed on our main FCBB site as well as several other marketing sites we market with
Selling Process
  1. Getting Started
  2. The Selling Process
  3. What Documents Do You Need?
  4. Terminology
  5. The First Choice Way
1: Maintain Operations 2: Value the Business 3: List in Confidence 4: Buyers/Negotiation 5: Post Transaction