This is the first installment in an ongoing series of articles providing practical information about all things business.

So, you’re thinking about selling your business… Maybe you’ve been approached by a potential buyer; maybe you’re thinking about speaking with a business broker; or maybe you’re looking to retire or try something new. If so, there are some key things you should be thinking about at the beginning of this journey.

Having assisted with both the purchase and sale of businesses, we have found these three tips to be incredibly useful to clients:

  1. Prepare for the due diligence process.

    This process gives a potential purchaser the opportunity to review all the details about your business. It covers everything from your legal organization, all your key agreements, your employment agreements and your insurance to your financial status. You could describe it as an intimate, get-to-know-you, do-I-like-you? phase. And the key to it all—getting organized. This means finding all of the above documents (including all signed copies), and having them easily accessible and organized. If possible, make them available in a PDF and/or scanned format. Also, you need to think about who you are disclosing your information to—are they are a competitor? Is it a fishing expedition? In getting organized, you are also looking at confidentiality, and processes to protect your information, as outlined below.

  2. Have your team in place.

    Selling your business involves every aspect of your business, so it involves all your key team members, even for the preliminary steps of getting organized before the sale. Your team of advisors can include your lawyer, accountant, bookkeeper, insurance agent, banker, financial advisor and more. Having that list of people ready to assist by starting early with the necessary lines of communication is important for a smooth beginning in any sale transaction. That said, if you are looking at a letter of intent or a document setting out basic terms of the transaction, it is important to have your lawyer and accountant involved at that time. Often there are agreed terms which can be difficult to go back on if they are key to the deal, and have implications you would not be aware of without legal or accounting advice.

  3. Understand privacy, compliance and confidentiality.

    In this age of electronic transfers and information sharing, it is vital to know what your obligations are and how to protect your information as well as the personal information you are responsible for under current privacy legislation, such as that of your employees. One of the very first documents you are likely to see is a confidentiality/non-disclosure agreement. This should not be treated like a cookie-cutter document. Any confidentiality/non-disclosure agreement needs to be tailored to your individual situation so that it considers the type of business, the type of information being shared and the jurisdiction.

Each business and business owner is unique. If you’re thinking of selling, the distinctive qualities of both you, as the owner, and your business need to be independently analyzed and discussed. Getting organized early will save time, stress and, above all, cost.

In our next article, we will discuss in more detail confidentiality and non-disclosure in the due diligence process—issues to consider, how to manage your confidentiality, and how to create processes to protect your information.