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Important List Of What Brokers Need From Sellers


Below is a short list of the minimum documentation you will need to provide your business broker before he or she can begin marketing and representing your business for sale.  Keep in mind that having everything prepared and completed before you market the business is essential.  First, your broker will be able to better analyze your business for potential pitfalls giving them time to come up with solutions before problems arise or adjust the expectations of the sale to the seller. Second, there is nothing that dampens a buyer's interest in a business more than waiting around for documentation.

Remember, buyers are looking at a variety of opportunities at the same time. They will grow tired of waiting and become frustrated (and possibly distrusting) if requests for information drag on and on.  Finally, your business broker presents the best aspects of your business to a buyer much like the way a lawyer tries to win a court case.  With more evidence to prove your case, the greatest chance for success!  Don't skimp and expect buyers to be impressed.

Profit and Loss statements for the past 3 years

This report (along with a Discretionary Earnings analysis which is created from the P & L) is the main evidence a seller and their broker will use to justify the company's purchase price.  In the past, parties have refused to share this information claiming it was proprietary or a vital business secret.  Understand P&L are private information, but without the broker being able to review them and then share them with a potential buyer (at the appropriate time) in most cases, you will not sell your business.

Interim Profit and Loss statements.

Potential buyers will want to be assured that the business's sales have not dramatically decreased since the business was put up for sale.  This statement can also be a great device to allow the seller to prove how lean and profitable he or she can run the business.

Income Tax Return (Corporate or Schedule C)

In most sales, buyers will ask to take a look at the Federal Income Tax Returns.  There are many companies whose Tax Returns do not match their P & L perfectly.  This is information that must be known from the beginning of the sale.  It is better to explain the situation to a potential buyer than have them feel the seller was not upfront with them.  If the seller is unwilling to share Tax Returns at the appropriate time (after securing an offer) most buyers will not want to continue with the purchase.

Copy of Lease (including latest amendments and or assignments).

The lease can be a deal killer (especially if ignored until the later part of the sales process).  Review your lease with your broker; find out if it is assignable.  If it is not, you or your broker should contact the landlord and discuss the possibility of a new lease with a qualified buyer.  Find out what the landlord is looking for in a buyer so your broker can use these standards to qualify any potential purchaser.

Complete list of Furniture, Fixtures and Equipment.

This list will be become part of the final purchase agreement.  Having a completed list to review during a tour in the due diligence process will insure that the buyer and seller have no miscommunications regarding what is included and what is not included.  Any equipment that is not fully owned by the business must be noted.  If it is on loan from a distributor or being purchased through a capital lease, your broker and any potential buyer must be notified.

Remember, this is the bare minimum of documentation need to start marketing a business in most cases.  I have a more detailed list, but not all parts of it are applicable to every type of business (e.g. Franchise agreement, Aging A/R report, copy of necessary licenses, ect.).  As general rule, the more complex or large the operation, the greater the amount of information your broker will need. 

As a final note, this list does not include the supplemental information the broker will need to understand the details of you operation (history, competitive edge over competition, employee details, etc.).  Every brokerage has different interview processes with their sellers, but once again, the more information you give your broker the better equipped he or she is to represent your company in its best light.

About The Author:  Joe D. Robertson, CBB is the broker / owner of Southern California Business Broker. Joe has over eighteen years of experience owning, operating and selling successful businesses. Joe can be reach by phone at 949-307-3817.

Watch for more blog posts / articles from me in the future!


Categories: BizBen Blog Contributor, Selling A Business



  Helpful Resources To Assist In Selling And Buying California Businesses
Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers

I've worked at top Bay Area law firms and have extensive experience with business entity formation, mergers, dissolutions, conversions, employment matters, including experience in reviewing and negotiating transactional documents such as leases and purchase agreements.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Elizabeth McGovern: Escrow Services - SF Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Joe Sandbank, Esq. - Legal Services

I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.

Brad Steinberg, Broker - Laundromat Specialists

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.


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