By the time Peterson Acquisitions has found a buyer for your business, you’ve already prepared much of the paperwork a financial institution will need from you to loan money to someone interested in buying your business. You’ve already supplied at least three years worth of the businesses tax returns, income statements and a balance sheet.
For the most part, those were the things used to determine a fair asking price. It was also used as part of the Confidential Business Review that told prospective buyers what they needed to know about your business. It helped them decide whether you had built the right business for them.
Though every bank has their own list of documentation they request from the seller, all are similar and have most of the same requirements, especially if your loan will be an SBA (Small Business Administration) loan.
Initially, the bank will evaluate whether the business is viable at the agreed on price. That means they are going to want answers to more questions besides the financial records. They are going to want to know about your typical customer. What are the demographics? Where are they from? How do most of them find you? How do they pay? Is it all upfront when they order? Do you offer any financing? They are going to want to know what kind of advertising you do and how much of your budget goes to that. They will want to know how many employees you have and how and where each of them fits into your organization. Are those employees going to stay? And who are your competitors? How are you better than them?
After the financial institute truly understands your business, what you do and how you do it, they’re almost ready to set a closing date.
While the lawyer is drawing up the Asset Purchase Agreement and the promissory note if you are supplying any of the financing for the buyer, you have to get busy with notes and lists:
Accounts Receivable aging (if that is part of the business deal)
Seller’s Affadavit of Goodwill (Why are you selling?)
Sellers operating agreement or by-laws if the business is a corporation
Equipment list including VIN, serial #s, estimated value, age, etc.
Copies of titles (or registrations) for anything applicable
Any loans to be paid off or an affidavit of no liens (if there are no liens against the business)
An inventory listing (if the inventory is of significant value.
And finally you get to relax and start planning that long vacation you’ve been thinking about taking for years. Enjoy!