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Preparing for the sale of your business

On Behalf of | Jan 12, 2023 | Business Law And Litigation |

Selling a business can be the capstone of a career and provide assets for your future commercial or personal plans. But it can be a full-time process and requires preparation.

Significant transaction

A business sale is among the most consequential business transactions. Planning can reduce its costs, increase sale proceeds and increase the likelihood of settlement.

More purchasers and sellers are buying representation and warranty insurance to cover indemnification obligations after closing. RWI helps sellers because it lowers escrows and other holdbacks and reduces sellers’ post-closure exposure. RWI carriers make purchasers engage in thorough due diligence.

Financial Statements

Before the sale process, assure that financial statements are current and accurate. Work with advisors on addressing any personal or family costs that were run through the business before diligence begins.


Removing liens can be difficult. Business owners are often unaware of these liens, banks do not release them, or the secured party no longer exists or is part of a different company. These phantom liens, unlike active liens, which may be paid off at closing, may take weeks to release.

Lien searches early in the process, however, can help resolve many issues. This can also help reduce delays.


Verify the good standing of your legal entity in every state of incorporation or formation. Businesses that have a complex entity structure or which file consolidated tax returns often misapply tax payments or report a return missing for subsidiaries that are part of consolidated returns.

Reviving an entity after revocation is not automatic in many states. It may be time-consuming.


Buyers will not purchase a business without conducting their due diligence, which has become more complex. To expedite this process, obtain and assemble fully executed electronic copies of all business records early in the process.

A diligence checklist includes:

  • Executed copies of customer and vendor agreements, leases, software agreements, benefit plans and other contracts.
  • Governing documents such as stock certificates, ledgers and minutes.
  • Tax returns for the business and benefit plans including form 5500s.


Dispose inventory that is outdated, slow and cannot be sold. This makes physical inventory counts simpler and reduces working capital disputes after closing.

Stay the course

Continue to operate your business like you own it. Maintain inventory process business payables and engage in normal action until the sale is final.

Letter of intent and purchase agreements require sellers to run their business in the ordinary course. You also want to maintain business activities because sales sometimes fall apart at the last minute.

Attorneys can help you get through these transactions. They can help you protect your interests.

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