So, you've decided to sell your agency. Many owners sell their agencies due to retirement, stress, personal reasons that impact the operation, "want to do something else" syndrome, personal health, and many other good reasons. To get the best price for your operation, you need to do some spring cleaning before going to market. Here are 14 things to do and prepare before taking the next step to getting your agency ready for sale. This list is not exhaustive.
Get your business taxes done. Get the latest fiscal year tax returns plus two prior years' taxes completed.
Provide at least 3 years of internal financial statements. Keep at least 3 years of internal financial and operating statements (e.g., QuickBooks, Microsoft Excel, Freshbooks). Be sure to include the current year-to-date financial statements.
Examine your business check register. You need track at least 2 years of check registers information. The business check register displays the cash coming into the business (which validates the sales figures) and the cash going out (which validate business expenses and owners' draws).
Prepare a Seller's Disclosure Statement (SDS). The SDS is a standard document in which an owner attests to prospective buyers the condition of the business including any material facts about the operation or the industry.
Review client contracts and analyze your client base. Examine your key client contracts. Do you rely heavily on a few key clients or is your revenue diversified? What client segments generate the most income and why? Which client segments generate the most revenue per hour or visit? What segments could you do better in?
Audit your billing process. Is your billing process easy to administer? What is your track record regarding rejected claims? How long does it take for your agency to get paid? What can you do to shorten the billing cycle?
Audit payroll records, review personnel policies and employment agreements. Are your payroll taxes current? Do you have policy compliance sign-offs from all employees and contractors? What employee or contractor contracts are in place? What are the terms in these agreements?
Update policies, procedures, and operating manuals. Are your policy manuals in compliance with your state's department of health and human resources? Are your agency's credentials up-to-date?
Document key vendor contracts. Do you have fully-executed copies of the office or facility lease, equipment leases, insurance policies, internet service provider contract, referral agreements, marketing contracts, and software licenses? Are any contract payments past due?
Review status of all licenses for administrators, staff, and contractors. Are all operating licenses current? Professional licenses?
Review insurance policies. Do you have adequate professional liability insurance? General liability covering the office or facility? Technology or cybersecurity coverage? Have any policies lapsed?
Review all inspections. Has the operation passed all inspections by your state's Department of Health and Human Services? Local inspections including fire and sanitation?
Assess condition of furniture, fixtures, and equipment. How worn is your furniture? Does it need to get replace? Is your equipment in good working order? Have you performed all updates recommended by your equipment manufacturer? Do your employees or contractor use their own equipment in rendering services for your agency? Are these devices adequate for your current agency needs? Are they electronic visit verification compliant? Time tracking capable?
Review franchise agreement (if any). Most franchisors have special conditions concerning the sale of a franchise. Carefully read your franchise agreement. Consult a franchise attorney if necessary.
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