Transitioning Your Business is a Team Sport


Most business owners only sell a business once in their lifetime, and for many it is the largest single financial transaction they will ever take on. Therefore, it is important to have the right team of trusted advisors to ensure it goes smoothly. There are a number of reasons to have such a team:

  • You’ve probably never been through the process before and don’t know what is involved.
  • It can be a very complex and emotional process, so having people who have already been there and understand what is customary or unusual to guide you through the process is critical.
  • Your team can keep things on track and deal with issues (and there will be issues) as they arise.
  • The process of selling a business is a full-time job and can be draining to do on your own—especially when you’re trying to focus on running your business at the same time.

At minimum, you should consider the following types of advisors to include on your team:

Investment Banker

The investment banker quarterbacks the selling process and is involved with every step from initial valuation to closing and beyond. An investment banker who is experienced with your industry and the size of your business can help find the right buyers (confidentially), maximize value by generating multiple offers, negotiate deal terms, and manage the due diligence and closing process. A good investment banker can also help you determine the right time to sell based on the growth forecast of the business and your personal financial goals.

Deal Attorney

Your deal attorney (preferably one who has experience with M&A deals of your size and nature) will get involved with more than just writing the Purchase & Sale Agreement, so they should have experience negotiating legal details and managing the legal aspects of due diligence and document flow leading up to closing. They will also be involved with evaluating letters of intent, advising on employee agreements and matters, and other legal issues involved in a business transition.

Financial Advisor

A financial advisor is key since you, your family and your investors can only go through the process of selling your business once. Along with your accountant, your financial advisor can advise you on capital gains taxes, estate taxes and personal matters such as philanthropy and gifting. Before deciding to sell, you need to have a comprehensive financial plan in place that includes input from your financial advisor, valuation from your investment banker and tax input from your CPA.

The tax implications can be very complex in business transactions and they have a significant impact on how much money you get to keep in the end. Insight from a CPA with deal structuring experience is important because they can help structure the deal in a way that minimizes your tax burden. You should also have your financial statements reviewed, at a minimum, by your CPA early in the process. A buyer may even require a quality of earnings report, so ensure your financial statements are in good shape before starting the transaction process.

In addition to the qualifications listed above, you should feel comfortable working with your advisors and have a good personality fit. Transitioning out of a business can be a very emotional process and can easily take 6-12 months to complete. During the many ups and downs, you need advisors you can confide in and who put your interests first.

Begin assembling your team as much as 2-3 years in advance of your planned transition date. It takes time to find the right advisors, experts you feel comfortable working with and who are right for your situation. The earlier the better in the case of a financial advisor and an investment banker—these two advisors can provide valuation and planning advice early on to help you figure out your financial and non-financial objectives after the transaction. You can only do this once, so make sure the timing is right.

New call-to-action


Published: 04/03/2017

Contact OneAccord