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Why You Need to Be Prepared to Disclose When Selling Your Business

Posted by Andrew Castaldy in Resources

You’ll have to go through a lot of different processes when you put your company up for sale. In fact, there’s a good chance you’ve put in week or months of effort beforehand to ensure that your company is ready for the right valuation. Still, it can come as a surprise when you realize just how much you have to disclose to a potential buyer of the company.

The more organized you can be at the outset of the sales process, the easier it will be for you to accomplish your goals and to sell your company successfully. Set aside time to speak with a knowledgeable business broker about the options available to you.

What Buyers Really Care About

A buyer in any position, whether or not they intend to purchase the business with cash or finance it, will want to know everything about the company they intend to acquire. This means that if there’s information to be found in the form of skeletons in the closet, they will likely dig it up during the disclosure phase. If there are problems like this, a buyer will eventually open that door and it is important to partner with a knowledgeable business broker first to identify this information and prepare to get out in front of it.

Understanding Disclosure

The disclosure process of your sale is also the point at which the negotiations are most likely to break down, so having an established relationship with a knowledgeable business broker professional at the outset will set you up for the highest level of success so that you can understand what to accomplish and how to approach disclosure with confidence.

Disclosures include the submission of many different types of evidence and documentation, including customer and supplier histories, contracts, revenue trends, financial details, growth outlook, industry trends and legal exposure. It is more beneficial when the seller of the company can disclose as many details as possible as early as possible after a nondisclosure agreement has been appropriately executed.

Months of hard and stressful work can be eliminated if a buyer obtains new information. It’s a good idea to have all of these details organized and discussed with the support of your business broker first. Schedule a consultation with a dedicated business broker to understand whether your company has done the necessary leg work to be prepared for the disclosure process. There are many different things to think about in the wake of selling your company.

But having a knowledgeable professional to guide you through each phase can help you to discover your next steps and feel more confident with what to do next. You may have opportunities to correct some of the issues that could be classified as skeletons in your closet and knowing this information upfront can make it that much easier to create a plan for addressing these or at least sharing these with a buyer with confidence well in advance.