Selling a Business: Process, Evidence and Completion

Prepare the First Serious Buyer Discussion

Give your accountant the starting earnings and the records that reconcile them. Keep the owner's ongoing work costed rather than making it disappear to improve the sale figure. The buyer discussion needs an explanation someone else can reproduce.

The model values the business using earnings and discounts non-recurring revenue. Show the actual recurring work separately from one-time sales. Don't assume that repeating a recurring-revenue percentage establishes the quality or continuity of each agreement.

Use the initial conversation to establish whether the prospective buyer's plan fits what you intend to sell. Keep your objectives available to your adviser, including the work you are willing to perform after completion. A buyer's interest in a number isn't yet agreement on the transaction.

Ask your legal adviser to establish the confidentiality and information-sharing arrangements before disclosing sensitive records. Have a named person manage what is released. Client credentials don't belong in a general buyer presentation.

Make the Early Terms Comparable

Have your transaction adviser put the proposed price beside the proposed structure. Identify what is paid at completion and what is deferred or conditional. A larger headline amount may describe a different payment promise from the smaller offer beside it.

Enterprise value is the value assigned to the operating business before the transaction's agreed cash, debt, and other adjustments. Ask the adviser to show the route from that starting value to owner proceeds. Have the relevant tax and fee calculations prepared for the actual proposal.

Keep buyer questions in a shared deal record. Put the approved answer beside the record that supports it, with a person responsible for unresolved work. That is more useful than recreating the same explanation in a fresh email each time.

Commercial adviser Nick Bartolo describes connecting an owner's sale decision with after-tax proceeds and the life they want afterward. Keep that as his planning approach. Use your own requirement when comparing terms, rather than letting an attractive headline substitute for the amount and timing you need.

Use the Letter to Define the Next Work

A letter of intent records the proposed transaction terms for the parties to work from. Have your attorney explain the actual document and its commitments before you accept it. Don't assume that its title tells you which obligations apply.

BDO's technology-business sale guide includes negotiating and signing a letter of intent among the stages of a controlled sale process. Use that as a transaction guide, with your advisers confirming how the particular deal will proceed.

Record the next information requests and the person who approves each response. Keep the timetable's dependencies visible. If an answer requires your accountant or a client-agreement review, assign it rather than promising a date the responsible person hasn't accepted.

A rule of thumb can't complete a deal. The useful milestone is an agreed decision with its next work assigned. Don't treat a letter as proof that all remaining questions are settled.

Answer Diligence With Traceable Records

Due diligence is the buyer's examination of the business and the claims behind the proposed transaction. Give each request an owner and an evidence reference. Have the person supplying the answer check it against the current records before it is released.

For the earnings example, the starting amount remains $730,276 until a supported adjustment changes it. Keep proposed changes separate and show the arithmetic for each. A buyer should be able to remove a disputed line and still reconstruct the remaining calculation.

Use the same discipline for the service records. Identify which agreement or report supports a claim about a client. If a system export leaves a question unanswered, label the missing evidence and give it to the person who can establish the answer.

Keep the deal's information work from taking over ordinary delivery. Name who handles the client service decisions while the owner is answering transaction questions. A sale process doesn't stop the MSP's existing commitments.

If diligence changes a material assumption, have the advisers explain its effect on the proposal. Record the revised decision rather than allowing an old price summary to remain the version everyone repeats. The calculation and the terms need to stay attached.

Prepare the Transfer and the Payment Together

Have the legal team reconcile the final agreement with the terms you understand. Keep the transaction-specific work with those responsible for checking it.

Ask the deal team for a completion checklist that identifies each required action and its owner. Keep conditions still awaiting confirmation visible. A calendar invitation doesn't establish that the transaction is ready to complete.

Have finance reconcile the agreed price with the adjustments and payment instructions approved for the transaction. Separate money due immediately from amounts with later conditions. Ask the responsible advisers to confirm completion and receipt through the agreed process, rather than treating a payment screenshot as the result.

Prepare the operational handover while the transaction work proceeds. The receiving team needs the approved information and the authority that takes effect at the agreed point. Don't let an informal introduction create an early access change that nobody authorized.

Keep the Remaining Obligations Assigned

After completion, retain the record of what was agreed and what still needs action. Give any later payment condition its own evidence requirement and owner. A transaction file needs to show what is due next as well as what has been signed.

Keep your continuing support role specific. Record which work you perform and who can make operating decisions after the transfer. An undefined promise to help can leave both sides expecting a different handover.

Start with your current stage and ask the adviser responsible for it to name the next decision. Give that person the reconciled evidence and record what remains unresolved. Progress is the movement from supported terms to completed obligations, rather than a larger collection of documents marked final.