{3 minutes to read}  Are you a business owner thinking about selling or transitioning your business? If so, I'm going to give you three things that you should start thinking about now, even if you have no definite plans to sell or transition your business within the next year or so. Hopefully, the information in this blog will be useful in assisting you in this process, which can be long and arduous. 

The first thing that you should do when you start thinking about transitioning or selling your business is to make sure that your governing documents are in order. What do I mean by your governing documents? If your business is an LLC, your governing documents would be your Articles of Organization or your Certificate of Organization and any Operating Agreement that was entered into between the LLC and the members of the LLC. You need to make sure that your business is currently operating as per the Operating Agreement, and if not, the Operating Agreement should be revised to reflect current practice.

If your business is a corporation, the governing documents are more involved. You should have been keeping up with annual Shareholder and/or Board of Director meetings. All of those meetings should be documented in the form of minutes. If any major decisions were made by the Board, or by the officers of the company, there may be a requirement to document those decisions in the governing documents.

Certainly, if there are Bylaws of the company or if there is a Shareholder Agreement — which is sometimes called a Buy/Sell Agreement — you need to make sure that the company is being operated in accordance with the Bylaws and the Shareholder Agreement, or those documents should be revised to reflect current practice. 

Secondly, make sure that your financial records are up-to-date and current. Talk to your accountant. Start getting an idea of what the company assets are, what the liabilities are, how you can trim those liabilities, and how you can increase the value of your assets. 

Third, understand your company's value. You don't need to go out now and get a valuation, and you may not ever need to get a formal valuation, but understand what goes into determining the value of your business. This could be different for different types of industries, so, talk to people within your industry. Talk to your accountant. Talk to business brokers who are familiar with the type of business that you own. Get an idea of what the value is and what amount you'll eventually be able to get out of the transition or the sale.

If you have any further questions, please contact me. I've handled many business sales, representing both buyers and sellers, and hopefully, I can assist you. Our contact information is on our website, www.TaylorLegal.com. Thanks. 

KATHERINE L. TAYLOR, ATTORNEY AND CPA

5850 Waterloo Rd

Suite 140

Columbia, MD21045

443-420-4075

443-420-4075 (fax)