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Mergers and Acquisitions Checklists

Planning the Disposal Process

Checklist Description

This checklist outlines what a seller should be doing to prepare for the sale of a business.

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The preparation for the disposal process starts after the seller has decided to sell the business. There can be several reasons why someone might want to sell his business. The business could need substantial investment, and selling a percentage of shares – and, therefore, a share in the business – would bring in the necessary finance to help develop the business overall. Lifestyle factors could also be involved: a seller may want to sell the whole of his business because of a wish to retire or to do something completely different.

Whatever the reason for the sale, preparing a business for disposal requires time and effort, and it can be expensive. In certain circumstances, a buyer may only be interested in the goodwill of the business sold and certain of its assets. A seller should be aware that such a sale would leave him with the rest of the business, including its liabilities. Usually, the best time to sell a business is when it is doing well, has a good set-up and is running smoothly, bringing in high profits, and has a successful financial and management record. Then a seller can fully capitalize on its success. In some cases, the buyer of a business is its own management team. This is known as a management buy-out (MBO).

A seller should start preparing for the sale long in advance. He or she needs to make sure that all papers, legal documents and contracts, permits for the business, and its books are in good order. He or she should involve professional advisers, legal and financial, as early as possible. Their help and advice will be required during the disposal process, but they can also provide useful tips when preparing the business for sale.

Staff knowledge of the planned sale is not necessary at this stage. Usually, managers are told because his or her cooperation is required when preparing the sale, but spreading the knowledge of the potential sale through the entire workforce could have a negative influence on the running of the business, as staff could begin to worry about work security.

With the advice of accountants, a seller should consider any tax issues that will affect a disposal, so that the tax burden is minimized. Any buyer will be interested in a well-run business with a good grip on its credit and creditors. A seller should consider renegotiating inefficient contracts with clients and utility providers and should sort out any existent and potential litigation.

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  • A well-prepared seller will be in a better position to negotiate a good price for the business.

  • A well-prepared seller will be in a better position to assess what warranties they will be able to give to the buyer without submitting himself or herself to unexpected risk.

  • An MBO could be more advantageous for a seller, as the managers know the business inside out.

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  • The initial investigations and later due diligence process could be expensive, both financially and in terms of time, if the acquisition does not go ahead.

  • Preparing for a sale will involve huge effort and a concentration of resources, which sometimes could be used to improve the business itself.

  • Selling is frequently emotionally difficult on a seller.

  • In an MBO, less money is usually offered for a business, because managers may not have access to good finance.

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Action Checklist

  • Consider carefully the need to sell and why you want to sell. It may well be that the timing is not ideal and that waiting could be advantageous.

  • Be prepared for a long and complicated due diligence process, which could prove time consuming as well as costly.

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Dos and Don’ts


  • Involve your solicitors and accountants in the evaluation of both the risks and potential benefits of a disposal, as well as the due diligence process.

  • Negotiate your rates and make a contingency plan for any cost overrun.

  • Plan carefully the tax implications of the disposal.


  • Don’t make the mistake of selling at the wrong time if waiting a while could bring a higher price.

  • Don’t overlook the importance of mitigating your liabilities under any warranties and indemnities given to the buyer, obtaining advice, and understanding your business.

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Further reading


  • Smith, Ian. Financial Techniques for Business Acquisitions and Disposals. 2nd ed. Hawksmere Report Series. London: Thorogood Publishing, 1998.
  • Steingold, Fred S. The Complete Guide to Selling a Business. 4th ed. Berkeley, CA: Nolo, 2012.


  • Card, Jon. “Selling your business.” Growing Business. Online at:
  • Gole, William J., and Paul J. Hilger. “Managing corporate divestiture transactions.” Journal of Accountancy (August 2008): 48–51. Online at:

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