Selling your business takes careful planning and preparation, sometimes beginning years in advance, but it can be critical to improving your value and marketability. As discussed in our blog “5 Steps for Managing an Unsolicited Offer,” one tool that will help you position your company to receive maximum value is to assemble a team of experts.
Our experience strongly indicates that selling your businesses is just one of those things you shouldn’t do alone. You need help preparing the offering, marketing your business, producing financial documents, completing legal papers and negotiating a sale. As you can see, there are a lot of moving parts when it comes to a company sale and it is best to get advice from experts who have the experience and knowledge to get you the most favorable terms.
Your transition team should consist of a few keys players; your accountant, attorney, intermediary (investment banker) and an appraiser. Each member can provide you with valuable insight and guidance through the transition process. It’s important to choose people who know your industry and business and can provide you with the most relevant data.
An accountant is usually the first person you will turn to for advice when preparing to sell, because they are the most familiar with the financial status of your business. Your accountant is essential in gathering the business’s historical and current financial statements as well as other documents that will be used to value your business and complete due diligence.
Knowing your company’s value is extremely critical when it comes to selling your business (for a more in-depth understanding of how to value your business check out our blog “Do you know what your business is worth?”). It can help you time your exit, plan your sale and be a reference point for negotiations.
A good intermediary is instrumental in selling your business, as they act as quarterback on your transaction team and counsel you through entire sales process. This role is typically filled by investment banks. Selecting the appropriate intermediary is arguably the most important choice in building your transaction team as they have a direct impact in how your company is marketed, who the company is marketed to, how efficient the process is run, and ultimately the business deal points that are negotiated. We may be biased, but we’re confident in saying that your Investment Banker is the one team member that can most directly impact the purchase price and value received in a transaction.
Your lawyer is responsible for drawing up the legal documents that will memorialize the business deal points that your Investment Bank helped you negotiate with the buyer. Make sure that your lawyer is familiar with all the legal aspects of selling a business, if they are not you might need to find a new one. Weak, or buyer-favorable, terms and indemnifications can take a huge cut out of your proceeds.
It is critical that all team members are on the same page working together to achieve the same goal. Establishing that each team member has a dedicated role to play in the sale of your business will ensure that all the work is getting done on time and without duplication. It is the intermediary that controls the playbook and directs each person through the process. It is your role as owner to ensure that your vision is shared with each member; they need to understand your goals and expectations, so they can provide you with the best comprehensive service possible. By selecting a team who understands your business and goals you will set yourself up for a successful transaction.