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Eric Wayne
United Realty Group
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Cooper City, FL 33330

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What Documentation do I need for Selling my Business

If you are thinking about selling my small business. One of your first questions may be what documents do I need to put together before I put my company on the market?

There are a number of documents that you should prepare, both before you pursue a sale and once you start working with a business broker. Your first step is to get a formal business appraisal of your company so that you have an idea of its value, says Stan Crow, of S. Crow Collateral in Boise, Idaho. Your appraiser will need a couple of documents: an adjusted balance sheet and a "statement of seller's discretionary income."

"Prepare a spreadsheet that shows the numbers from the business' last three years' tax returns, with adjustments to add back your salary, depreciation deductions, contributions, interest expense, interest income, and any other items of income or expense that are not integral to the business," he said. This document will show your discretionary income for each of the last three years. The adjusted balance sheet that you prepare (or ask your accountant to prepare for you) will adjust your company's assets to fair market value and eliminate assets and liabilities that a buyer will not acquire, such as cash and leased equipment.

Once you have those documents prepared, hire an experienced business appraiser to give you a professional opinion of your company's market value. This number will lend credibility to your sales price should you decide to pursue a sale of your business.