Most business owners only sell a company once.
You may have spent 10, 20, or 30 years building your business. You may even be the second or third generation to own it. Either way, if you're thinking about a sale, this is not the time to cut corners.
The right advisors can help protect you from risk, keep the process moving, and maximize the amount of cash you ultimately receive from the transaction.
Here are the key advisors every business owner should consider before pursuing an exit strategy.
Your Internal Finance Team
Before speaking with buyers, make sure your financial information is organized and accessible. Your internal finance team will play a critical role throughout the transaction by providing:
- Historical financial statements
- Key performance indicators (KPIs)
- Customer, revenue, and operational reporting
- Other financial documentation requested during due diligence
Most buyers will want to review at least three years of financial information. Having these materials organized early can help avoid delays and establish credibility with prospective buyers.
Your CPA Firm
Your CPA is often one of the first outside advisors involved in a transaction.
They may have prepared your historical financial statements and tax returns and will likely interact with the buyer's financial team throughout the process.
However, business owners should recognize that not all CPA firms have extensive merger and acquisition experience. A great accountant is not necessarily a transaction specialist.
Transaction-Focused Tax Advisors
The tax consequences of selling a business can be significant.
Many business owners assume taxes can be addressed after a deal is negotiated. In reality, planning opportunities often exist before a transaction closes. The earlier those conversations happen, the more options may be available.
In some cases, your existing CPA firm may provide this expertise. In others, it may make sense to engage professionals who specialize in transaction-related tax planning.
Their role is simple: help structure the transaction in a way that protects and maximizes your after-tax proceeds.
M&A Legal Counsel
If there is one advisor that deserves special attention, it is your legal counsel.
Many business owners already have a trusted attorney who has helped with contracts, employment matters, or general business issues over the years. Those relationships remain valuable, but selling a business requires a specialized skill set.
The buyer will almost certainly have attorneys who focus on mergers and acquisitions every day. Sellers should strongly consider having the same level of expertise on their side of the table.
Experienced M&A counsel helps negotiate transaction documents, coordinate due diligence, identify risks, and protect sellers both before and after closing.
One of the biggest misconceptions among business owners is that the transaction ends when the deal closes. In reality, certain risks can continue long after the sale is complete. An experienced M&A attorney helps ensure those risks are properly addressed before documents are signed.
Wealth Managers and Estate Planning Advisors
Many business owners also engage wealth managers, financial planners, or estate planning professionals while preparing for a sale.
These advisors typically are not essential to completing the transaction itself, but they can help owners prepare for what comes next. For many entrepreneurs, the sale of a business represents the largest liquidity event of their lives, making advance planning worthwhile.
A Final Word
Think of advisors as an investment, not an expense.
It can be tempting to view advisors as another cost associated with a transaction.
A better way to think about it is as a small investment in getting the deal done correctly.
Without experienced financial advisors, buyers may uncover issues during diligence that create leverage during negotiations or impact value. Without experienced legal counsel, sellers may expose themselves to risks that survive the closing of the transaction.
You only get one opportunity to sell your business. Surrounding yourself with experienced advisors can help ensure you're protected, your risks are mitigated, and you're maximizing the value you've spent years creating.
