TBA05.26.16There’s much talk these days about the business plan, yet the sale-of-the-business plan seems to get little attention. Right now is the time to discuss the eventual transition and the due diligence checklist.  Planning ahead for your potential acquirer’s required list of documents is an effective blueprint for the organization of your files and records.

You may say, “I’m never going to sell my business,” or even, “I’m giving the business to my kids so I won’t have to worry about the buyer’s due diligence.” But knowing what an acquirer wants to see and why will give you a big head start on what records are important to anyone who will own, manage, or invest in your company.

It is essential to have these documents in order from day one because you can’t afford to wait until Mr. Big comes knocking. What are you going say then? “Oh wait just a minute… please stay interested! I know I’ve got that information around here somewhere!”

By the time you locate what the acquirer wants to see, you can lose your salespeople and customers. Your equity will diminish by the minute. After-the-fact artwork sign-offs will cost a small fortune since you’ve now built the brand and the artist knows the valuable of her work has increased greatly.

Time generally favors the buyer, not the seller, because news gets out, your employees look elsewhere for job security, and customers look elsewhere for stability. They all are concerned about what the next guy will do to your company and your brand. So be prepared! Here’s the short list of the essentials you need right now:

  1. Legal Documents. All contracts and agreements (both written and verbal) relating to: real estate, equipment, supplies, outsourced services, purchases, sales, licenses, filings, patents, trademarks, copyrights, government approvals, corporate documents, permits, domains and
  2. Disclosures. Anything irregular, surprising, hidden, unauthorized or in any way possible to cause the acquirer potential liability going forward. Include any written or verbal agreements that have been or may have been violated. These disclosures really protect you as the seller, so don’t skimp here. It’s the stuff you don’t disclose that will come back to bite you!
  3. Artwork and Designs. All logos, pictures, trade dress, package designs, websites, landing pages, marketing materials, signage, slogans, catchphrases, presentation deck slides, branded items, process maps, infographics, guides, etc. Get these sign-offs at the time they are created.
  4. Sales Histories. Beginning on day one, show your sales graphically over time. Break out by customer, demographics, region, etc. If online, break them out by platform or sales campaign. Your acquirer wants to see your history and rate of growth.
  5. Chart of Accounts. This is your followers, your lists, your direct-to-consumer buyers, your wholesalers and retail accounts. Add contact information, correspondence, pricing and sales. Acquirers will use this to predict your brand’s growth potential.
  6. Employees. All records of past and current employees, including: legal HR compliant information, training records, salaries, benefits, and commissions. All reprimands, accolades, or other information in each employees’ files. Include any ads you ran for jobs, job descriptions, organization and process charts, and your Employee Handbook.
  7. Financials. This includes tax returns, P&L, and statements of net worth going back to the beginning. Also include cost of goods, cost of sales, pricing studies, price support and programming, and any other financial documents that will help them understand and grow your business.

There’s much more to be sure, and, depending on your business, there may be some special documents they want to see. The best way to know is to ask a business broker in your space. But by all means do get started today!





Who We Are

Michael Houlihan and Bonnie Harvey Barefoot Wine Founders

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) & Shelf Smarts courses to help consumer product brand builders achieve success. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular business site at www.thebarefootspirit.com.

To make inquiries for keynote speaking, trainings or consulting, please contact sales@thebarefootspirit.com.