How to Sell a Business in Michigan – Website Closers

Michigan businesses are thriving, as evidenced by its recognition from major outlets as a premier destination for commerce. Its ample labor force, supportive business climate, affordable living expenses, and extensive global logistics networks create an attractive ecosystem for growth.

For business owners to sell a business in Michigan, the timing is perfect, thanks to its reputation as a leading business destination and the robust state of its market.

Key Takeaways

• To sell a business in Michigan, assess its value for a fair price. Online tools offer estimates, but professional valuation by brokers or CPAs ensures accuracy. Their comprehensive evaluation maximizes value, reveals growth opportunities, and strengthens negotiation power.
• Collaborate with Michigan business brokers to market your business effectively, maintaining confidentiality. They exercise tailored strategies, create compelling listings, target platforms, vet buyers, and leverage networks so you can focus on enhancing company value while they handle promotions.
• After accepting the buyer’s letter of intent, due diligence begins. Negotiate sale price, deal structure, and payment terms. Michigan brokers manage due diligence, allowing focus on business. Prepare closing documents, including the purchase agreement, closing statement, lease agreements, and tax clearances.

Preparing Your Business for Sale

Once you choose to sell a business in Michigan, the next step is assessing business value to establish a fair selling price. You may use online tools or self-assessment to get a ballpark number, but solely relying on them isn’t enough.

You need a professional business valuation delivered by business brokers or CPAs, as they have the knowledge and experience about the various methodologies and market conditions to give you the most accurate assessment. Working with them helps you achieve maximized value through their comprehensive evaluation that accounts for all revenue-generating factors, which requires cleaning up and organizing financial documentation thoroughly.

Business valuation reveals opportunities for growth. It is a necessary process that gets you closer to your post-sale goals. Brokers can suggest where you can cut costs when improving operational efficiency. This enhances your business, boosts its value, and gives you bargaining power during negotiations, which take place during the due diligence process.

Finding Potential Buyers

Marketing your business effectively and efficiently is what you’ll accomplish when you work with Michigan business brokers. These professionals are specifically ideal for company heads who lack connections with serious buyers. Working with them also maintains confidentiality throughout the transaction. 

Michigan brokerage firms deliver tailored marketing strategies, including the following: 

• Posting compelling business listings they crafted
• Showcasing them on targeted platforms so they only attract serious buyers
• Identifying and vetting potential buyers. 

The advantage of working with business brokers in Michigan lies in the flexibility to choose your level of involvement in buyer outreach and the sale process. Additionally, their extensive networks connect you with diverse investors. You can focus on improving the value of your company within its operations while they do all the promotional work.

Negotiation and Due Diligence

The due diligence phase commences after accepting the buyer’s letter of intent. Here, you put into action carefully crafted negotiation strategies, previously discussed with your Michigan broker or established in advance. Key aspects to negotiate include the following:

• Business’s sale price
• Structuring the deal
  • whether it’s an asset or stock transaction, 
  • a lump-sum payment or installments
• specific payment terms. 

Managing the due diligence process is a task you can leave up to business brokers. While you can actively participate in negotiations, entrusting them to Michigan merger and acquisition experts allows you to focus on operating your company, maintaining or even enhancing its value throughout the sale.

Closing the Sale

Prior to closing, ensure you’re prepared with post-sale obligations, responsibilities, and documentation that require your signature. This helps avoid last-minute surprises or rushed searches for missing information, which could delay closing.

Required documentation for closing:

• Purchase agreement. Outlines purchase price and other terms agreed upon during negotiations.
• A lawyer prepared details of the purchase price and any cost adjustments between the buyer and seller.
• Lease agreements. Specifies lease terms for the company’s real estate between the buyer and the seller/a third party.
• Consulting agreement. Payment terms and conditions are set for the seller’s business sale advisory team.
• Disclosure schedules. Provide evidence supporting the seller’s representations and warranties, such as current customer contracts.
• Escrow agreements: All relevant escrow details.
• Officer Certificate: Confirms the seller’s authorization to sell the assets or corporation.
• Bill of Sale. Details of the sale and transfer of company assets are not mentioned in the purchase agreement.

Michigan-specific closing procedures:

• Notify the Treasury. Accomplish and mail Form 163 (Notice of Change or Discontinuance) to the Michigan Department of Treasury’s Registration Section.
• Tax Clearance Certificate: Request a Tax Clearance Certificate to confirm all taxes are paid.
• Pay delinquent taxes. Settle any tax obligations with a letter detailing the business name, address, FEIN, tax type, and periods due, including tax, penalty, and interest.
• Unemployment Tax Notification: If covered by the Michigan Employment Securities Act, complete and deliver Form UIA 1027 to the buyer at least two days before transferring ownership legally.

FAQ

How to close a business in Michigan​ online?

It is not possible to close a business in Michigan fully via online procedures. Notices need to be sent via mail.

How do I sell a small business in Michigan?

Even small businesses go through the process of valuation, promotion, due diligence, and closing. The main difference is the method used to calculate the company’s value. Business brokers typically use the SDE method.

How to sell a business in Michigan for free?

At the very least, you’ll need advisory services in specific areas of the sale. For example, you’ll need a paid business valuation to determine the asking price. If you have serious prospects, there will be less fees to pay for. But if you don’t have ideas about where to start, you’ll have to work with a broker.

How to request a tax clearance from the Michigan Department of Treasury?

Just file 5156 (Request for Tax Clearance Certificate or Tax Status Letter) to the state treasury.

Conclusion

Final recommendations for selling your business in Michigan

• Review online resources for Michigan business sellers so you’ll know what to expect from the processes involved.
• When in doubt, choose to partner with business brokers to help you through it all. If you’re operating mainly in the digital space, let WebsiteClosers.com help you.
• Settle all financial obligations and outstanding debts to improve the business value.