Checklist: Steps for Successfully Selling Your Business

For many business owners, selling their company is uncharted territory. The process can be daunting and overwhelming – but it doesn’t have to be. Use the below steps as a checklist to simplify and clarify everything you need to do to ensure that selling your business goes successfully:

Business Documents

  • If the 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 the Articles of Incorporation and Bylaws (if corporation)
  • If the business is a limited liability company, ensure all the members have signed off on the sale of the business.
    • Have your attorney ensure the sale is compliant with any Articles of Organization and bylaws.
  • When selling a partnership, have your attorney ensure the terms of the sale are compliant with any Partnership Agreements that may be in effect.
  • If you are selling your sole proprietorship there is not much you will need to do. However, you should ensure you or your attorney prepares any documents that will transfer assets of the business to the new owner.
    • 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
    • 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 of sold off separately.
  • Prepare loan documents such as:
    • Promissory Notes;
    • Security Agreements from the buyer (including any guarantors); and
    • Prepare a 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

  • Notify and file proper forms with the Securities and Exchange Commission before selling stock in order to avoid insider trader penalties. (If Applicable)
  • Update the Secretary of State’s Office about changes to the LLC ownership/dissolution and/or corporation changes.

Property Documents

  • Prepare lease transfer agreements for the 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 notice for changes in contact information if necessary.
  • Determine if the Internet Service Provider is going to remain the same, and, if so, change the contact agent with the Internet Service Provider.
  • If Internet Service Provider is changing, put steps into place (i.e. have the new service activated before the old is canceled) to ensure there is no lapse in service.
  • Assign someone to take over the website.
    • Update ownership changes on the website.
    • Update any changes to contact information.
    • 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 potential delays.
  • Determine who will be responsible for any financial loss as a result of outstanding or backordered 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; and
    • The total purchase price after all adjustments and credits are determined.

Rebecca Rouse, Legal Extern
JUX Law Firm