Are you thinking about selling your business? If so, are your business books ready for review and scrutiny? Many owners don’t realize how incomplete their files are until a potential buyer starts sifting through every page, pointing out gaps or inconsistencies. Some issues crop up more often than others in due diligence reviews. They can all be remedied in advance of a sale with the proactive investment of time and resources and without the accompanying pressure of a pending transaction.

Here is a quick laundry list of classic business lapses.

• Forgetting that the business evolves, and the initial setup may no longer be a good fit (it may be time to convert that sole proprietorship to an LLC or take advantage of tax savings by making an S-corporation election).
• Disregarding asset protection for a business that is a high-risk target for litigation.
• Not converting oral agreements with employees to writing.
• Misclassifying employees as independent contractors.
• Inadequately documenting employee-related issues, including unsatisfactory performance reviews, alleged harassment and discrimination claims, and the solutions and accommodations offered.
• Failing to track the status of contracts with evergreen renewal clauses (letting the contracts renew inadvertently and suffering the consequences).
• Not paying attention to assignment and change of control clauses in contracts and leases.
• Failing to adequately protect business IP assets with NDAs, restrictive covenants, and trademark and copyright registrations.
• Failing to adopt security, data protection, privacy policies, and business contingency plans.
• Forgetting to periodically review any nexus issues that may exist as a result of doing business, opening offices, or hiring employees in various states.
• Not considering a succession plan for business continuity and failing to adopt partnership, operating, or shareholders’ agreements with appropriate buy-sell, drag-along, and tag-along provisions.

If you have ever considered addressing these issues but have yet to get around to them, now is the time to act.