Once the decision to sell their Business has been made, an owner should ensure that the business being sold is in a condition to maximize its salability and the price received. To this end, the vendor should begin by assessing the company's strengths and weaknesses. This is commonly accomplished through an assessment of factors that are internal to the business.

A) Information Systems

The vendor should assess the information system in place. Is it well designed? Does it generate timely and useful management information (monthly financial statement packages, budget analysis, and so on)? A good information system will assist the purchaser in his or her due diligence and facilitate a smooth transition.

B) Management Structure

Is there a capable manager(s) in place who are willing and able to manage the business on his or her own or under new ownership? Are there other key employees that are essential to the operating success of the business and that will help to ensure a smooth transition and continuity of earnings? The retention of key employees is critically important to the continuity of the company's revenue base. Elements to consider include the stability and turnover of key staff. Formalization of operating procedures and policy manuals.

C) Financial Statement Review

In preparing a company for sale, a vendor should review the financial statements and consider restructuring the financial position, if necessary. For example, redundant assets, consisting of assets owned by a company that are not required in its day-to-day operations should be segregated from the operating assets and dealt with separately. Common examples include excess investments in subsidiaries, which are not connected with the core business, and investment portfolios. These should be identified and either disposed of, with the net proceeds distributed to the owner(s) or specifically noted for exclusion in negotiations. Consideration should also be given to the separation of real estate assets from operating assets since the return on real estate may be less than the business return and therefore not fully taken into account in the pricing of the business.

D) Corporate Housekeeping

Preparing a company for sale also involves consideration of contingent liabilities and outstanding litigious matters. To the extent possible, these should either be dealt with prior to a sale, which includes obtaining legal advice or clearly set out at an early stage for the purchaser's own assessment. Similarly, a company's tax status should be reviewed to minimize the likelihood of the unanticipated reassessments of prior years. The company's corporate records (incorporating documents, minute books, share register, and so forth) should be organized, up to date, and readily accessible, as should its leases, major contracts, and similar business documents, as applicable.

The above are some of the key areas which Ostir Business Brokers reviews with business owners and their professional advisors (lawyer, accountant etc.) to ensure that the business sale is being structured in a manner which maximizes its salability and the price received.