7 Essential Steps Before Selling Your Business

Antonio Mazzucco (*)

Deciding to sell a company is undoubtedly one of the most significant steps in any entrepreneur's life. It's not just a financial or strategic move, but also an emotional and personal milestone. In many cases, the company represents years of dedication, risks taken, achievements, and lessons learned. Therefore, the sales process needs to be conducted with caution, planning, and a long-term vision.

In the world of mergers and acquisitions (M&A), it's common for entrepreneurs to feel intimidated by the number of variables involved: market conditions, the attractiveness of the business to investors, the time the process may take, tax and legal issues, among other factors. However, when structured properly, the M&A process can not only result in a good sale price, but also open up new opportunities, both for the seller and for the future of the company itself.

1. Put the house in order – Before even seeking buyers, it's essential to get your house in order. A disorganized company, with gaps in its records or outstanding corporate issues, will hardly inspire the confidence necessary for a significant transaction.

This means carefully reviewing all areas: accounting, finance, legal, human resources, and regulatory compliance. Corporate documents must be up-to-date, contracts organized, and asset records clear. It's not just about "having the paperwork in order": it's about ensuring that any analysis by potential buyers, especially during due diligence, doesn't reveal unpleasant surprises.

Intangible assets, such as software, trademarks, and patents, also need to be properly registered. In many M&A transactions, these assets can represent a significant portion of the value perceived by the buyer. Similarly, the corporate structure should be reviewed, as many transactions depend on prior approvals from shareholders, investors, or creditors.

Another important point is alignment with key stakeholders. Investors, partners, and even financiers need to be considered in the process from the beginning, otherwise they may hinder the negotiation later on. It is common for financing contracts to stipulate the need for prior authorization from the creditor in case of a change in corporate control. Anticipating this type of analysis can prevent delays or impasses in the final stage of the sale.

2. Understand what the buyer values – From the buyer's perspective, acquiring a company is not just an investment in the present, but primarily a vision for the future. Therefore, key performance indicators (KPIs) take center stage: they demonstrate not only the current health of the business, but also its growth potential. Among the most closely observed elements are:

Adjustments to EBITDA: non-recurring expenses, such as legal fees or specific consulting services, can be removed to show a more accurate profitability.

Hidden assets: often, real estate or holdings in other companies are not fully reflected in the balance sheets.

Intellectual property: software, trademarks, and patents can represent significant competitive advantages.

Accumulated tax losses: under certain conditions, they can be used to reduce the buyer's tax burden in the future.

Here, the role of the financial advisor is crucial. They help build a solid narrative about the company, showcasing potential efficiency gains, expansion possibilities in strategic markets, and differentiators that can justify a higher valuation. The credibility of this narrative depends on realistic projections based on consistent numbers.

3. Plan for the tax impact – Another often underestimated point is the tax impact of the transaction. The form of sale—whether through assets or shares—has very different tax consequences. In some cases, a well-planned tax structure can legitimately reduce the burden on capital gains, increasing the net value the seller will receive.

This planning should begin with a careful assessment: what was the acquisition cost of the shares or assets? Which tax regime best applies to the operation? Is there room for prior corporate reorganizations that reduce the tax impact? Questions like these need to be analyzed before taking the company to market, since simple adjustments made preventively can often avoid significant losses.

4. Prepare for Due diligence – Due diligence is a central step in any M&A process. It involves a thorough review of the company by the buyer, covering legal, financial, commercial, and operational aspects. The goal is to identify risks, confirm information, and assess opportunities.

At this stage, the use of data rooms is common; these are digital platforms that allow for the secure and controlled organization and availability of documents. A well-structured data room not only speeds up the process but also conveys confidence to the buyer. Furthermore, it gives the seller the chance to identify problems early and correct them before they negatively impact the price of the negotiation.

5. Assemble a specialized team – Selling a company is not something that can be done haphazardly. While the business owner needs to continue managing the day-to-day operations, assembling a team of specialized advisors is essential.

The lawyer who handles the day-to-day operations of a company, for example, may not be the most suitable professional for an M&A process. This type of transaction requires specific experience, knowledge in different areas of law (corporate, contractual, labor, regulatory, tax) and the ability to handle intense negotiations within short timeframes.

Similarly, a financial advisor with experience in the company's sector can make all the difference, providing insights into market trends, valuation comparisons, and even potential strategic buyers. Ultimately, the choice of team can determine whether the operation will be successful or not.

6. Be clear about the timing of a transition – Many business owners underestimate how long a sale can take. Smaller deals tend to be faster, but even then, they are rarely completed in less than four months. The average timeframe generally ranges from six months to a year. In more complex cases, especially when approvals from regulatory bodies or creditors are required, the process can take even longer.

In addition to the complexity of the company, external factors also influence the process: interest rates, capital availability, market liquidity, and even industry trends can accelerate or delay the transaction. In some cases, a prior corporate reorganization will be necessary, adding more steps to the timeline.

7. Assess the right time to sell – As mentioned, several factors can influence the sale of a company. To define the start of a sales process, the entrepreneur must assess the ideal moment, considering the macroeconomic and sectoral scenario, as well as the strategic interest of competitors or companies in the production chain, even if vertically integrated.

The sale will only reach its maximum value when the company, the market, and the buyers are aligned. Ultimately, selling a company is more than just a financial transaction: it's a strategic process that demands vision, preparation, and discipline. Each step, from internal organization to the final negotiation, directly impacts the value and security of the transaction.

With proper planning and a team of experienced advisors, the sale can be conducted successfully.

(*) Specialist in corporate business law and partner at the law firm Mazzucco&Mello – Sociedade de Advogados.

Source: Business & Companies Newspaper.