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2024 May be a Great Year to Sell Your Business

Are you thinking about selling your business in 2024? Business sale activity has been down in 2023 but we see things heating up in 2024.  The initial shock of rising interest rates that cooled buying activity has sunk in and become normalized.  The money is still there to buy businesses and there are also buyers who have not purchased much so there’s  pent-up demand for transactions.  Buyers will be in the market to acquire businesses, but they’ll proceed with some caution.  That means buyers will be more particular about their choices for targets. In addition, sellers should expect due diligence during the sale process to be even more intense.  


Every business owner will exit their business at some point.  Even if you’re unsure whether 2024 is the right time to sell, the time to start planning is now. Start getting the pieces in place now. Preparing ahead of time makes the process go more smoothly and quite often helps owners to get more value out of the sale of their business.  The number one thing business owners need to do to prepare for a sale is to get their financial house in order. 

Understanding What Information Buyers Will Want to See

The heart of every business sale is the due diligence process.  Business owners often underappreciate the due diligence process in a business sale.  It can be rigorous and will take longer than you expect.  Buyers and, more importantly, their lenders, will want to see your financial documents.    Make no mistake – being prepared for this process can make the difference between a deal that closes or one that sinks. 

The key financial information you should expect to produce includes:

  • Financial reports for the last 3-5 years

  • Tax return records

  • Tax payment records, including payroll and sales taxes

  • Bank and credit statements

  • Employee and payroll records to prove payroll costs and labor law regulation compliance

  • Proof of business insurance policies

  • Physical inventory counts

The goal in providing each of these items is to convey legitimacy and portray an accurate picture of the company’s overall financial health to attract and inform a buyer.

Cleaning Up Your Books

Cleaning up your books is another crucial aspect of preparing to sell your business. Having clean books can greatly enhance the attractiveness of your business to potential buyers. It presents a clear picture of your business’ financial health, making it easier for potential buyers to evaluate the business.  Moreover, clean books can expedite the due diligence process and reduce the opportunities for the buyer to re-trade the deal. It also demonstrates to potential buyers that you run a professional and well-organized business, which can command a higher sale price.

Cleaning up your books will include:

  • Standardize your internal bookkeeping and accounting methods

  • Separating personal finances from the company’s finances

  • Check internal expenses, especially owner bonuses, perks and benefits against industry benchmarks

  • Organizing financial records

  • Reviewing and cleaning up financial statements (or creating them if you don’t typically prepare them)

  • Documenting the dollar value of assets and liabilities (including intellectual property)

Understand the Broader Financial Picture

Getting your books ready is a key first step when selling your business, but the well-prepared seller doesn’t stop there. You also need to understand the broader financial picture of a sale transaction.  Understanding these things will facilitate negotiations with potential buyers and help you better navigate the sales process: 

  • Work with a tax advisor to determine the best strategy to minimize your tax liability

  • What are the aspects of your business that are important to how it makes money

  • How profitable is your business?  What aspects are most and least profitable?

  • What things about your business are likely to be most important to the buyer’s lenders or investors?

  • What role are you willing to play in your business post-closing?  If you’ll have a role, how will you be compensated?

It’s never too early to plan for selling a business because there are a lot of steps that need to happen before coming to the table to sign the paperwork. Getting your financial house in order involves cleaning up your books, assessing the overall financial health of your business, putting together the information that buyers will need to enter into an agreement, working through the details of the deal, and then closing out the sale. 

The experienced business attorneys at Fiffik Law Group bring decades of business transaction experience to guide you in buying or selling a company. Our knowledgeable and experienced professionals manage the transaction from start to close and are committed to achieving your goals and delivering maximum value.  


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