5 Business Professionals You Should Engage Before Selling Your Business
When it is time to sell a business, you’ll need to get some professional advice to ensure that you negotiate the best deal possible. Few things in life demand more effort than building and operating a viable business. For that reason, entrepreneurs deserve to reap the fruits of their labor when they are ready to sell.
Whether it is time to retire or you simply want to cash out and invest in another opportunity, a smooth transition is always the goal. Under less favorable circumstances when an owner finds it necessary to sell for health reasons or due to financial necessity, having the right professional team on your side is essential.
Obtaining the best advice available pertaining to the financial and legal aspects of selling your business is crucial for deciding on a favorable price and terms. There is no substitute for accurate information and solid counsel when negotiating a transaction as important to your future as the sale of your business.
The five professionals any business owner needs in their corner it’s time to sell are a trustworthy CPA, attorney, business broker, financial appraiser and financial advisor.
CPA
Before your business is evaluated by an appraiser or possibly audited by a potential buyer, you have to get your financial records in order. Obtaining the services of a CPA is the first order of business.
While some businesses may rely on a CPA exclusively for quarterly or annual financial statements and tax returns, the sale of your business requires the expertise of a CPA to get prepared for the scrutiny of potential buyers and their financial team.
Special care should be given to separating personal and business expenses that overlap. Many small business owners get a bit sloppy in basic bookkeeping matters. Cleaning this type of problem up before the books are reviewed is always a recommended plan of action.
Business.com recommends having up to three years of financial records prepared for inspection. In addition to having financial statements and tax returns available, you will also need copies of all your major contracts and leases.
Attorney
Having an attorney on retainer during this period of time is highly-recommended. You will need your attorney available to answer any legal questions related to legal documentation.
Expect to be asked for proof of ownership on property and records related to any ownership transfers. All major assets should be trackable and documented with bills of sale and other related documentation required to verify ownership for that type asset.
Digitalexits recommends that all offers should be in writing. When an offer is made, it should be reviewed by your attorney. Attorneys can be very helpful during the negotiation process, offering valuable advice about necessary considerations related to making a strategic counter-offer.
Business Broker
Hiring an experienced business broker is a wise decision for most sellers. IBBA claims that one of the important benefits a broker offers a client is a confidential process that protects the identity of the seller.
The worst thing that can happen is for employees or clients to find out you’re selling the business.
If key employees or clients “jump ship” based on rumors you’re selling, business revenues are likely to fall. Whether you call Sydneys best business broker or a different highly-rated company, you will benefit from hiring a professional business broker.
No one wants to be in a position where they are selling a business when sales drop. The best offers are made to thriving businesses on an upward swing.
An established business broker can market your business, leaving the owner to continue running the business. Brokers can tap into both old and new contacts to leverage a broader group of prospective buyers, selling the business faster than a seller could on their own.
The quicker the sale, the less chance employees or clients will find out the business is being sold.
Business Appraiser
While some business owners avoid getting a business appraisal due to the cost, there are many reasons this decision should be reconsidered. The most obvious justification for for obtaining a professional valuation is so that you don’t list your business at a high price that scares away buyers or a price too low that equates to less than a full price on your sale.
Appraisers are usually CPAs with special training on techniques associated with business appraisals. A valuation report is compiled that includes detailed explanations about how the final evaluation figure is calculated.
This report is a valuable asset since it can be used as a credible backup from an objective third- party to show buyers how you arrived at your business price.
Financial Advisor
Consulting with a financial advisor before negotiating the terms of your sale can shed light on the best way to structure the sale so that the compensation will align with your personal financial objectives.
For example, it might be more practical to take payment over time instead of getting a lump sum payment, if the interest rate is higher than what you can expect to earn in a different investment. There is no one-size-fits-all answer about how to structure a financial transaction.
Financial advisors can assess your personal and family goals and help you make a decision customized to your unique situation. There is no substitute for objective input from an advisor who understands your financial history and goals for the future.
Conclusion
The sale of a business is a monumental decision and could be the single largest deal you make in your lifetime. Since no one person can be an expert in everything, it is advisable to bring in experts when necessary.
It is impossible to be objective when it is time to sell “your baby.” With so much money at stake, there is no excuse for not benefiting from the experience of experts.
Category: Business
