In case you didn’t know already, we are in a Seller’s market. It is still important for Sellers to be organized and prepared for due diligence to ensure a faster close. Utilizing a broker with experience and a well organized data room will save you time and money in the long run. Here are just a few items that you can focus on in order to make due diligence easier on everyone:
1) Real Estate: Your building (physical plant) can often be the main focus of due diligence. Before you start the sales process, make sure you have evidence of ownership entities and that you are zoned correctly. Also, make a list of any Environmental issues that you are aware of and be prepared to correct these problems, if you haven’t already. The best thing that you can do is develop a plan in advance. Make your own list of contractors in case you need them for things like roof, foundation, HVAC and Environmental. Accompany the Buyer’s professionals on the tours so that if the need comes up for you to get a second opinion, you can explain the issue to your contractors.
2) Personal Property: Make a list of inventory that is going to be excluded from the sale. It is also a good idea to remove these items before going to market. For instance, if there is art or a sculpture that has sentimental value, remove it so that a buyer doesn’t think it is staying after the sale. Also, look into your community name, entities, phone numbers, website/Email, etc. and find out what can be transferred and what notices are necessary.
3) Employee Matters: Make sure that you run a report with all of your employees. Know what your PTO liability is going to be and make a plan for how that is going to be paid out. You might want to leave a credit for a buyer so that they can pay out employees.
4) Insurance/Litigation: Contact your insurance agent and obtain a Loss Run report for the last five years. Make a list of any outstanding litigation and potential liabilities that you are aware of that need to be identified in the Purchase and Sale Agreement.
5) Surveys: Put together state and federal health surveys and any POC for the last three years. It is going to be important that you are in compliance and you are going to want to show a buyer you are in compliance and what you have done in order to stay in compliance.
6) Finances: Obtain a copy of your mortgage and note. Make sure there is no lockout or prepayment penalty. Contact your tax accountant and discuss your potential tax liabilities associated with a sale. They might be able to give you advice on how to mitigate that liability on the front end as well.
For more information on how to sell your facility faster and at a top-of-the-market price, contact Ryan Saul at email@example.com or 630-858-2501.