Selling your business is a big decision that requires you to gather and prepare your business assets for prospective buyers to review. In general, you should include your intellectual property, financial, and physical assets so interested parties can accurately assess and value your business. Preparing an accurate list of assets also ensures transparency between both parties. A Stamford business lawyer from Wofsey Rosen can advise you through this process in order to make it more productive and efficient.

Intellectual Property Assets

Your business’s intellectual property may comprise a large part of your company’s value. These assets often include your organization’s identity, name, symbols, inventions, technology, trade secrets, and more. Intellectual property assets are often what differentiate your business from others and drive its momentum. You should carefully evaluate all of your IP assets and relevant information about each to make it easier for potential buyers to review. Some common IP assets are:

• Trademarks: Symbols or words that represent a service or good. These marks become synonymous with the specific asset or service it is used for. Trademarks can be registered and protected under federal, or other, laws.
• Copyrights: Unique creations are automatically protected from the moment they are fixed in a tangible form. However, companies may also benefit by registering their copyright with the U.S. Copyright Office.
• Patents: These assets are generally inventions that receive government protection. During the life of the patent, which can last up to 20 years, other parties cannot replicate your invention or sell it without express permission.
• Trade secrets: Proprietary information your business uses to conduct business. These assets may take various forms, depending on the nature of your business.

When preparing to sell your business, you may need a valuation of your intellectual property assets. This valuation can be ascertained by looking at the income they generate, their market value, or the cost of purchasing or recreating the assets.  In order to maximize their value, you will want to make sure your intellectual property assets are protected by appropriate non-disclosure and other formal agreements.

Financial Records

Your company’s financial records are important and demonstrate the health of the business and its ability to generate income. Prospective buyers will review these records when deciding whether to move forward with purchasing your business. It is essential to gather all financial documents before selling your company so they are in one place when you sell. Below are some key groups of financial records you will need to prepare:

• Financial statements: Documents such as profit and loss statements, bank statements, aging reports, and financial projections can show the current and anticipated future state of the business.
• Tax records: Tax returns provide transparency into the income and expenses generated by a business. Historic tax filings give prospective buyers confidence that all tax obligations have been met.
• Statements of Cash flow: This is an important indicator of how well a business is doing. Cash flow statements and balance sheets highlight how well a company is operating and its liquidity.

It is important to gather and organize each of these financial assets so they can be presented to prospective buyers at the appropriate time. Be prepared to show several years’ worth of financial documentation so buyers can gain a comprehensive understanding of your business and whether it is a wise investment for them.

Physical Assets

Your business also likely has physical assets that it uses in its day-to-day operations.  While you may take them for granted, these assets are necessary in order to serve your clients or customers.  You should catalogue and value these assets so that you are not leaving any money on the table when you sell your business.  Some key physical assets include:

• Real Property: The location where your business is conducted or where you store other assets (like a warehouse). Real property may include land and buildings that are owned or leased.
• Equipment: Technology, machinery, computers, vehicles, desks, chairs, etc. all have value and should be included in a sale.
• Supplies and inventory: All merchandise, goods, or operational supplies either add to the value of your company or are used to generate value and income. They should be valued in an appropriate manner.

Detailed information should be provided about each physical asset so potential buyers not only know what they are acquiring (or not acquiring), but use information about these assets to determine a fair value for the business.

Legal Representation Helps You Prepare Your Business to Sell

Preparing documentation that adequately reflects the various tangible and intangible assets of your business can seem like a daunting task. The team at Wofsey Rosen can help this process and business owners by providing clarity and step by step guidance.