Prepare your business for sale. Audit the books to verify the accuracy of accounting, and verify inventory and assets. Repair any mechanical or cosmetic elements of the business that require attention. In other words, expend whatever effort is necessary to put your best face forward.
Solicit a valuation of your business. Hire an independent auditor or consultant who specializes in the valuation of companies for sale. Task him with analyzing every aspect of the business to determine the company's fair market value. If the professional makes recommendations for improving the value of the business, implement them if possible.
Prepare a sales package to advertise your business. The sales package should contain a one-page summary of your business operation, the last annual report if there was one, and summaries of finances and assets. Prepare a more detailed package for those interested in making an offer. Include results of your last financial audit, detailed financials, such as balance sheets, profit and loss statements and cash flow statements, and a summary of employees. Post advertisements for the sale in publications and on Internet sites dedicated to bringing business sellers and buyers together.
Invite prospective purchasers to do their due diligence, which means examining the business in detail to make sure it is the right investment for them. A prospective purchaser may hire his own accountants or auditors to go through company financials, assets and inventory. Expect this type of scrutiny. Make it easier for a prospective purchaser to decide to buy your business by answering questions and providing access to essential information.
Negotiate the sales price. Compare the purchase offers you receive with your valuation of the business. If there is a significant difference between your highest offer and your valuation, you may submit a counteroffer. Support it with a detailed explanation of why your price is more appropriate than the offer price.
Draft the stock transfer agreement. Name the seller and the buyer, state how many shares are being transferred and that this number of shares constitutes the entire business. Name the price per share or total price for the business and how this money is to be transmitted. Name the effective date of the transfer. State that the seller shall have no further rights in the business after execution of the agreement, or specify what rights the seller will retain. Include a clause stating that the sale includes a confidentiality provision that is attached to the transfer agreement. Sign and date the agreement.
Draft the confidentiality agreement. Name the parties to the agreement, those who will sign it and be bound by its terms. Specify the information to be kept confidential, such as the number of shares sold, share price and purchaser's identity. State that the purchaser agrees to keep the foregoing information confidential and not use the confidential information for personal gain. Name any exclusions, meaning instances where the agreement does not apply, such as in response to a court-ordered subpoena. Include a clause specifying that an injunction and monetary damages may be sought if the agreement is breached. Set out how long the agreement shall be in effect. Sign the confidentiality agreement and attach it to the stock transfer agreement.