The Talent You Need When Selling a Business
04 June 2018
- Professional Business Broker or M&A specialist
These guys and gals sell businesses for a living. They know how to value a business so that it has a good chance of selling while also giving you the best chance of getting the best price. They know how to market a business confidentially. They likely have a database of buyers that they can go to. They know the moving parts and how to negotiate on each. They have worked with transaction attorneys and know the documents that are needed, the way to transfer licenses and intellectual property, how to handle payables and receivables, what to do with any real estate and so on.
One of the most important aspects of a sale – and arguably the aspect that must be addressed first – is value. What is your business worth? As I’ve stated for years, you’ve got to know what the market says your business is worth – not what you think it’s worth – before deciding to sell. A professional business broker or M&A specialist can tell you.
Part of your plan has to include consideration of what you’re going to be doing after the sale. If your intentions are simply to nurse a Scotch or glass of wine and watch the grass grow, that’s one thing. On the other hand, if you plan to spend the next 10 years traveling around the world or competing with Larry Ellison (“The BIG Dog”) for the America’s Cup, that suggests that an entirely different financial condition will be required. You need to have some idea of what your business is worth because if your plans for life after you sell require a certain amount of money, you’d better know up front if the sale of your business will provide that money.
Find a professional. Look for the CBI – Certified Business Intermediary – designation. If you’d like to know how to find one, let me know here:
There will be tax consequences when your business sells. I’m writing this about five months after the United States passed pretty significant tax legislation that makes selling assets a FAR more remunerative – and less “taxing” – exercise than was the case for many years. Other countries, in an effort to stay competitive, are following suit. But no matter how generous any new tax regime might be, you’re going to owe some.
Given how efficiently government spends its taxpayers’ money, most people would like to send as little as possible to the tax man, on the theory that, on balance, the individual who earned it could “waste” it FAR more enjoyably than how the government would waste it.
There are multiple ways to shelter a great deal of the proceeds of the sale and set up a predictable cash flow for many years to come. A CPA experienced in this – a transactional CPA – will be able to show you how to keep more of your money. Find one with experience in structuring tax affairs to avoid paying more than you have to.
- A financial planner
I’m assuming that the business you will eventually sell has been growing under your leadership for years. If that is the case, you are likely going to reap a handsome reward for all your work. (See “Accountant”, above.) Do you know how to best deploy those funds to insure that you’ll have what you need to live the way you plan to live after the sale?
A financial planner can give you options for reaching your post-sale goals, be they watching the grass grow or chasing Larry around the world.
A financial planner is a professional that will help you organize your finances and project the results of your savings and investments so you can see how well prepared you are for life after the sale. A financial planner also helps you make decisions with your money that will help you reach your financial goals as efficiently as possible. Find a pro. Look for the CFP (Certified Financial Planner) designation. Having a CFP on your team will help you avoid the dreaded situation of running out of money before you run out of time.
- The right attorney
Your cousin might be a tiger in divorce court and your brother-in-law might be one of the best ambulance-chasers in the region but don’t waste any time with either of them. You need a transaction attorney, someone that plays in this sandbox daily.
Advising you on the intricacies of the various and sundry documents that are part of the sale of a business is a complex task. Your corporate attorney may not be the right person for this. You want to find someone that specializes in this type of work; someone that advises on similar transactions every day. Such a person not only has the experience and knowledge necessary to help bring about the best result, they also have staff that is knowledgeable and experienced in business transfers – a fact that will go a LONG way to making the entire process more orderly and pleasant.
Line this talent up as you begin to think about selling. Many business brokers already work with these other professionals and may be able to suggest a coupe for you to meet with.
Want to learn more about planning and developing an exit strategy? We’ve put together Five Steps for Developing an Exit Strategy and it’s yours FREE by simply telling me where to send it.
If you have any questions, comments or feedback on this topic – or any topic related to business – I want to hear from you. Put them in the Comments box below. For example, if you want to sell your business, what is your biggest concern about the process? Are you wondering what your business is worth or how long the sales process might be? Let me know. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.
I’ll be back with you again next Monday. In the meantime, I hope you have a profitable week! And if you didn’t click the link in the meta description, do so here – and enjoy!
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