Selling Your Business? Start with a Business Handover Checklist

Pen, tablet, and notebook with plans sketched out on paper

For many business owners, the idea of passing the reins of their business onto someone new is scary, overwhelming, and even a bit bittersweet. On the other side of that, though, many buyers are experiencing their own anxieties about taking the helm. A business handover checklist can help both parties approach the sale with more confidence in their ability to transition smoothly. When both buyer and seller feel prepared to help business performance continue, the process is more likely to be a success. 

The 4-Step Handover Process

When it comes time to sell your business, there’s far more that has to happen between initial offer and final sale. Zoran Sarabaca, founder of Xcllusive Business Sales, details the four-step process that appropriately lessens the original owner’s involvement while gradually increasing the new owner’s involvement:

In stage one, “Getting Familiar,” the old owner is 100% still involved in the business, while the new owner’s only responsibility is to learn what they can about the company before they step into their new role. 

Stage two involves in-depth “Training” from the old owner to the new owner, wherein the new owner actually begins slowly taking on small parts of the business until they are eventually running the entire operation. 

That leads to stage three, Handover, where the new owner is running between 75-100% of the business with the old owner still on-hand to wrap things up and ensure everything is running smoothly. Eventually, when the new owner is on their own, it’s traditional to enter the “Assistance” phase, where both parties agree to maintaining contact for a set amount of time in case there are any questions about running the business.

Taking things step-by-step in the transition is just one strategy of increasing buyer and seller confidence, though. Combining the 4-step handover process with additional resources in the form of a business handover checklist is ideal, and good to have on hand to share with your buyer during initial talks. 

Building a Business Handover Checklist

Once you’ve decided to sell, take some time to truly reflect on your business and all of the nuances that come along with running it. Even the most seemingly insignificant detail, like who you call for landscaping services or how often bank deposits are made, is of the utmost importance for everything to run smoothly as your business changes hands. 

To help you start considering some of these finer details, start with this checklist:

Deciding to Sell

Chat with a business coach to ensure that you are fully prepared to go through with the sale process. They can help you get a handle on your finances, your intentions and hopes for the business, and how to set yourself up for success.
How are you going to sell? Will you do it privately or work with an agency? Are you more concerned about the process being simple or saving the most money?
Chat with your lawyer, your accountant, and any other professional who provides a service for your business. They are going to end up playing a huge role, between gathering documentation, ensuring that all signatures are in the right places, and everything in between. 

Preparing Your Documentation

Get all legal, sales, and tax forms compiled. Because some things can take time, start both a physical and digital portfolio that is consistently updated as new information is gathered. Be sure that this includes any property sales, like equipment, vehicles that come with the same, and all contracts like leases.
Watch how a day goes in the life of your business. Write down every person you contact, every maintenance operation you schedule, every payroll task you complete, etc. Continue until you truly feel that you’ve documented all of the ins-and-outs that a new owner would have to know to run the business smoothly.
Pull any supplier or contractor documentation, and transfer these contracts to the new owner. 
Provide copies of all recent financial forecasts, rolling budgets, and information about cash flow. 
Go through employee contracts and ensure that your employees are protected through the sale of the business, or inform them of any stipulations that may come up over the course of the handover.  
Round up any closing documents, like promissory notes, inventories and inventory values, final accounts receivable and payable, insurance documentations, and all other agreements. 

While this business handover checklist isn’t comprehensive, it’s a good place to get started. The most important thing to remember is that a handover is a process. It can’t really be simmered down to just a few steps. Instead, go into it with the mindset that you’re going to work together with your attorney, your accountant, your employees, your family and friends who have a stake in the business, and the seller to create a business transfer that works for everyone. You’ll successfully transition out, the new owner will successfully transfer in, and all parties are assured of the continued success of their investment. 

Stop back next week, and we’ll dive into the specifics of transitioning out, with a focus on ways that you can support the new owner and how you know when it’s time to completely step away from the business. 

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