Passing the Baton: Transferring the Business Checklist

After you sell your business, it’s time to transfer the business to the new owner. This is the time to handle all of the legal actions necessary to formally transfer your business, to ease its transition to the new owner, and then to begin the transfer into your own new role, whether that means an all-new chapter in your life or an all-new relationship with your business and its new owner.

1. Provide Comprehensive Information

Give the buyer all information necessary to assume operation of the business, including:

• Alarm codes.
• Computer, software, and online access codes and passwords.
• Safe combinations.
• Customer, supplier, utility, vendor, and distributor lists and supporting information.
• Keys to locks, including building doors, vehicles, and file cabinets.
• Operating manuals for all equipment.
• Your personal contact information (if you will not be remaining during a transition period), including where to send all material required by the purchase and sale agreement.

2. Legal Steps for Business Dissolution

If your business was structured as a corporation or LLC, take legal steps to dissolve your business entity.

• Meet with your board, partners, or LLC to pass a resolution to formally dissolve the business.
• Notify the IRS within 30 days of dissolution, using Form 966.
• File articles of dissolution with the state where your business was formed and any other state where it is registered. If your business was formed as a sole proprietorship, following the sale it will automatically close once you wind up operations.

3. Cease Business Operations

Complete forms and actions to cease operations of your business entity. Rely on legal advice as you complete following steps:

• Notify contacts for all contracts that are being assigned to or assumed by the buyer.
• Notify creditors to explain how bills will be paid, either by you or the buyer.
• Cancel business permits or licenses, assumed business name, and other registrations.
• Give cancellation notice on your lease if it will not be transferring to the buyer.
• Cancel insurance policies not being assumed by the buyer.
• Pay off bills and collect accounts receivable not being assumed by the buyer.
• Distribute assets remaining in your business after the sale closing, either to yourself if your business is structured as a sole proprietorship or to shareholders, partners, or LLC members.
• Close your employer ID number with the IRS.
• Close business bank accounts and credit cards.
• Close the business line of credit, if any.

4. Announce the Sale

There is no longer any reason to keep the news of your sale quiet, although buyers of restaurants or retail shops sometimes shield customers from the news until a transition period is complete and concern over a customer exodus appears unnecessary.

• Tell your employees. Begin with key employees before making an announcement to all staff. Opt for a personal presentation by you and the buyer, avoiding email (which can be quickly forwarded) if at all possible.
  • Stress confidentiality until you can contact customers, suppliers, and others.
  • Briefly explain why you are selling and your confidence in the new owner’s expertise and plans.
  • Introduce the new owner who can explain future plans and how employees will transfer to the new organization.
  • Share the timeline including when the sale will be made public and why confidentiality is essential until that time.
• Inform customers, suppliers, and business associates, reaching out first and personally to those who are most valuable to the business before making a general announcement to all. Move quickly to avoid the news passing through the grapevine.
  
  If your contact list is long, send all but key contacts an email or regular mail announcement explaining that with great pleasure and after considerable planning you are pleased to introduce the new owner of your business. Share a short statement of why you sold, how long you will remain with the business, if you will, and what you are planning to do next. Include a copy of or link to a complete announcement or attach the news release you will deliver to news outlets.

• Announce the sale to news outlets. Prepare a news release or sale fact sheet complete with all facts in a single document that you can distribute to local and industry media, news sites, blogs, and broadcast stations.
  
  Describe who to contact for more information (and how), when the news can be released, the date of the announcement, a headline summarizing the announcement, and a clear presentation of facts. Consider also including a quote from you or the buyer and a photo of the buyer.

• Move aside. Even if you remain with the business during a transition period or thereafter, the business now belongs to its new owner. Help staff, customers, and business associates transfer their confidence by moving yourself out of the visible leadership role, unless your agreed-upon ongoing role specifies otherwise.
• Move on. You have done it! You have sold your business! Now it is time to set a new goal. Chase a new dream. Buy a new business. The choice is yours.