Welcome back. In my earlier video, I identified a number of steps that you can take now - prior to negotiating with a buyer - to make the sale of your business easier and, possibly, make your business more marketable as well.

Today, I want to touch on a few additional steps:

Number One: Sort out the Real Property.

If the properties your business operates out of are leased, make sure you review the lease terms. If a term will be ending soon - or the lease has become a month-to-month lease - and the location is important to your business - then consider negotiating an extension or entering into a new lease. Having a lease with a long term in a valuable location makes your business more marketable to buyers and will be one less unknown to worry about when negotiating a sale.

During extension negotiations, you also may be able to loosen the standard "no assignment" provision in the lease to make it easier to assign the lease at the time of a sale.

If the properties your business operates out of are owned by you, consider whether you would like to retain ownership of the real property and lease the real property back to the new business owner. Or, whether the sale of the real property to the buyer is a condition of the sale of the business.

Regardless, it's often a good idea to place the real property in a separate, single-purpose LLC to keep liability from the property separate from the business or the individual owner.

Number Two: Identify Your Key Employees:

In my previous video, I mentioned that it might be a good idea to incentivize key employees to stick around if a prospective sale of the business is looming.

Conversely, it may also be a good idea to identify key employees to execute restrictive covenants that would limit their ability to compete with the business or hire the business's employees if those key employees decide to venture off on their own. Getting your key employees to sign a restrictive covenant agreement now will be easier and less expensive than if you wait until a sale is pending.

Amongst other reasons, an additional competitor in the marketplace - and one of your own making, no less - may drive the value of your business down. An attorney in the state in which you operate should draft restrictive covenants to ensure they are enforceable and not overly broad.

Number Three: Accounting And Tax Considerations

You should seek the advice of a CPA or tax counsel prior to negotiating or entering into a contract for the sale of your business.

Experienced CPAs are often capable of identifying problem areas in your record-keeping that can be fixed easily and will yield a higher purchase price from a buyer. Even something as simple as changing the way you record receivables may increase the value of your business.

Trained experts will also be able to identify expenses in your business that are unique to your ownership of the business and therefore should be removed from any valuation based on earnings. Additionally, by seeking appropriate advice early, you may also have time to structure your business to maximize your tax advantage from the sale.

For more information, please visit my blog at www.bfvlaw.com.

And as always, please let me know if I can help.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.