Selling Your Business: Preparation Guide

TL;DR: Selling a business is a major transaction requiring months of preparation — financial records, legal documentation, and due diligence readiness. Starting early gives you the strongest negotiating position.

What You Need to Know

Selling a business is one of the most significant financial events in an entrepreneur's life. Yet many business owners wait until they decide to sell before organising the documentation that buyers demand — and this lack of preparation costs them time, money, and sometimes the deal itself.

Buyers and their advisors will conduct thorough due diligence before completing any acquisition. They will want to see financial statements, tax records, contracts, employment agreements, intellectual property registrations, and more. If these documents are incomplete, inconsistent, or missing, buyers may reduce their offer or walk away entirely.

Preparation for a business sale can take 12–24 months if done properly. This guide walks you through the documentation and process steps that matter most, with a comparison of requirements across seven countries.

MmowW Scrib🐮 is a document preparation service, not a law firm. We do not provide legal advice.

How It Works: A Practical Overview

Organise Your Financial Records

The foundation of any business sale is clean, accurate financial records. Buyers typically want to see:

• Three to five years of financial statements (profit and loss, balance sheet, cash flow)
• Tax returns for the same period
• Management accounts for the current year to date
• A clear breakdown of owner's drawings vs. business expenses
• Any adjustments that normalise earnings (often called Seller's Discretionary Earnings or EBITDA adjustments)

If your accounts have been prepared by an accountant, obtain certified copies. If they have not been formally prepared, this is the time to rectify that. Buyers will heavily discount businesses with self-prepared, uncertified financials.

Document Your Contracts and Relationships

Buyers are purchasing not just assets but ongoing relationships. You will need to locate and organise:

• Customer contracts (especially long-term or recurring revenue agreements)
• Supplier agreements and their transferability clauses
• Lease agreements for premises and equipment
• Employment contracts for all staff
• Any non-compete or exclusivity agreements

Pay particular attention to "change of control" clauses in existing contracts — these may give the other party the right to terminate if ownership changes. Identify these early so you can manage them proactively.

Prepare Your Corporate Documents

Buyers will want to verify the legal standing of your company. Gather:

• Certificate of incorporation
• Constitution or articles of association
• Shareholders' register and share certificates
• Minutes of board and shareholder meetings (last 3–5 years)
• Any shareholders' agreements
• Intellectual property registrations (trademarks, patents, copyrights)

Get Your Intellectual Property in Order

Ensure all trademarks, domain names, and other IP are registered in the company's name — not the founder's personal name. This is a surprisingly common issue that can derail a sale. Transferring IP from personal to company ownership can take months and should be done well before the sale process begins.

Understand Your Valuation

Before approaching buyers, understand what your business is worth. Common valuation methods include multiples of EBITDA, revenue multiples (common in SaaS and service businesses), and net asset value. Engage a qualified business valuator or accountant to prepare a formal valuation.

Country-by-Country Comparison

Key government resources:

• UK: www.gov.uk/business-legal-issues/buying-or-selling-a-business
• Australia: business.gov.au/change-and-growth/selling-your-business
• USA: www.sba.gov/business-guide/manage-your-business/close-or-sell-your-business

Common Mistakes to Avoid

1. Starting preparation too late. Many sellers only begin organising documents when they have a buyer interested. This creates pressure, extends timelines, and gives buyers negotiating leverage. Start preparing 12–24 months before your target sale date.
2. Confusing asset sales and share sales. In an asset sale, the buyer purchases specific business assets. In a share sale, they purchase your shares in the company and inherit all liabilities. The tax and liability implications are very different — consult a qualified attorney and accountant before deciding which structure to pursue.
3. Overlooking change-of-control clauses. Leases, customer contracts, and financing agreements often contain provisions that trigger on a change of ownership. Failing to identify these can derail a completed deal or require renegotiation at the worst possible time.
4. Failing to maintain confidentiality. Word spreading prematurely that a business is for sale can unsettle employees, customers, and suppliers. Use Non-Disclosure Agreements before sharing any business information with prospective buyers.
5. Neglecting the personal tax implications. Capital gains tax, entrepreneurs' relief (UK), small business rollover (Australia), and equivalent provisions in other countries can significantly affect your net proceeds. Get tax advice before, not after, you sell.

Next Steps: Get Started Today

MmowW Scrib🐮 helps you prepare the foundational documents needed in a business sale — from corporate document checklists to NDA preparation support.

Helpful tools:

• Cost Calculator — estimate transaction document preparation costs
• Director Checker — verify director and shareholder status
• Filing Deadlines — stay on top of sale process milestones

MmowW Scrib🐮 is a document preparation service, not a law firm. We do not provide legal advice. Business sale transactions are complex — always engage a qualified attorney, accountant, and business broker.

Frequently Asked Questions

Q: How long does selling a business typically take?

A: From the start of formal marketing to completion, most small business sales take 6–12 months. Adding preparation time, the full process can span 18–24 months. Larger or more complex businesses typically take longer due to extended due diligence.

Q: Should I use a business broker?

A: Business brokers can add significant value by identifying buyers, managing the process, and maintaining confidentiality. Their fees typically range from 5–10% of the sale price. For smaller businesses, the cost may be justified; for larger transactions, M&A advisors are typically used. In either case, also engage a qualified attorney and accountant.

Q: What is an Information Memorandum?

A: An Information Memorandum (IM) or Confidential Information Memorandum (CIM) is a document provided to prospective buyers that describes your business, its financial performance, operations, and growth opportunities. It is typically prepared with the help of an advisor and is shared only after a buyer has signed an NDA.

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