How to Prepare Your Business for Sale

Selling a business can be the largest and most important deal of an entrepreneur's career. Regardless of what prompts the sale, selling a business is a high-stakes transaction, with far-reaching financial

In the best of all worlds, the owner begins to prepare his or her business for sale at least one year in advance. Start by assessing financial books with an eye toward creating audited financial statements and projections that illustrate the company's revenue and growth potential.

Records should be formalized and clearly document all transactions. This way, potential buyers can easily evaluate the company, and a new manager can take over with minimal training.

Eliminate idiosyncrasies. The new owner will not want to face a customer who expects special treatment, nor will he want to be the ogre who cancels a long-standing verbal agreement with the company's oldest customer.

Examine all supplier and customer contracts. Make sure terms and conditions will not expire or require renegotiation just as a new owner steps in. Terminate contracts that might trouble a potential buyer or that drain the company financially or serve little purpose.