This article was originally published on June 8, 2023 on the I-95 Business website.
Selling your business may be one of the most pivotal events of your life. However, the process is fraught with complexities and challenges that can stand in the way of securing the best deal.
While you might be tempted to go it alone, experience shows that business owners achieve the optimal results when they partner with knowledgeable advisors to sell the company.
Why You Need a Team of Trusted Advisors
The right team of professionals will help you understand the nuances and complexities of the sale process, prepare you for what to expect, and guide you across the finish line successfully. Besides serving as trusted advisors you can confide in, ask questions of, and tap for sound advice, your advisors will:
- Advise you on ways to maximize the value of your business before you go to market, increasing the odds you will sell at a higher price;
- Negotiate the best deal terms and structure, which are just as critical as the sale price;
- Enable you to focus on running the business (instead of the all-consuming task of selling the company), which is critical to keeping the business growing profitably; and
- Help you avoid the risk of spending time and money dealing with a buyer that is unscrupulous or not serious about closing the deal.
Simply put, your deal team can save you significant time, money, and heartache.
The Value of Each Team Member
A complete M&A deal team often includes six key professionals, each bringing vital skills, capabilities, and expertise. When choosing your advisors, always look for extensive experience working on M&A transactions; knowledge of your industry is a plus.
- The Investment Banker (also called the M&A Advisor) takes the lead role in driving the sale process, advising you along the way. They prepare a business valuation (which tells you what the company is worth), market your business to buyers, facilitate meetings between your management and the buyers’, negotiate with finalists, manage the rigorous due diligence process, and coordinate with the rest of your team.
- The CPA prepares key financials before the sale process begins—such as audited or reviewed financial statements—and provides the financial documents buyers use to value the deal. If you currently work with a generalist accountant, consider tapping a CPA firm with M&A experience for the potential of a more lucrative outcome.
- The Tax Specialist helps you understand the tax implications of the sale—early on, based on the business valuation, then again later, after your team has negotiated a sale price. The tax specialist also recommends strategies to reduce your tax liability and works with the CPA and investment banker to determine the best deal structure.
- The M&A attorney helps you understand the specifics of the deal structure, the sale agreement, and other transaction documents—all of which are difficult to navigate without a knowledgeable legal advisor.
- The Wealth Manager assesses your financial position and helps you manage the sale proceeds based on your investment style and goals, both immediately after the deal and as you move into retirement or prepare to start or acquire a new business.
- The Estate Planning Attorney devises a strategy for protecting the wealth that results from the sale, now and for future generations. They also draft legal documents to protect and distribute your wealth, articulate your health directives, and reduce estate tax impacts.
When to Assemble Your Team of Advisors
Even if you are not ready to sell your business now, it is not too soon to select the professionals who will guide you to a successful outcome. In fact, assembling your team one to three years before you plan to sell the company is ideal.
Starting early gives you more time and opportunities to maximize the business’s value by growing revenue and improving earnings, so you can avoid the risk of leaving money on the table. More runway also gives your team more time to develop strategies to reduce your tax liability and adapt your estate plan.
When you are ready to assemble a deal team in preparation for selling your business, consider selecting an investment banker first. Based on their experience handling many successful deals, the investment banker can connect you with other professionals who have helped business owners like you achieve their financial goals when they are ready to exit the business, securing the best deal team for the job.
About Chesapeake Corporate Advisors
Chesapeake Corporate Advisors is a boutique investment banking and corporate advisory firm providing strategic advisory services (value creation) and investment banking services (value realization) to companies with revenues between $10 million and $200 million.
