Pull together a team of experts.
Schloemer Law Firm • August 12, 2017
So, you have built your business for decades and made it your pride and joy. You have worked hard and long enough and now is the time for retirement, and you are now looking to reap the benefits of your hard work by selling your business.
Where to start?
The Advisory Team
You will want to make as much as possible from the sale, of course, and you want it done quickly, without any issues. To get started, you will need to put together a small, trusted advisory team that can protect your interests and help you get the best deal possible.
Your team should consist of:
- An Accountant
- Investment Banker/Broker
- An Attorney
You likely have used a particular accountant or accounting firm, so having someone familiar with your business is helpful. Simply put, your accountant will review your assets, liabilities, and what will be included within in the sale in order to come up with an objective valuation.
Buyers will want to know specifics about your business and review financial information, such as:
- Past earnings
- Cash flow
- Balance sheets
- Equity statements
- Business tax returns
- How the business has reacted to economic and market conditions
- Tax implications of the transaction
- Deal structure
These are all details within the expertise of your accountant.
For your own benefit, the accountant will help structure the compensation package that you will be receiving from the transaction.
The Investment Banker/Broker
Depending on the size of the transaction, this professional performs several functions for the Seller. An investment banker or broker adds value to the process by advising you about how much your business is worth, or at least giving you a range of valuation, and helping negotiate deals. This individual should have knowledge and insights about M&A trends, historical information, and current market conditions.
This partner can also do the following for you:
- Create a list of potential buyers
- Create marketing materials
- Prepare the Confidential Information Memorandum (CIM)
- Solicit indications of interest from potential buyers
- Pre-qualify potential buyers
- Prepare you for management meetings with serious buyers
- Help create a competitive environment
- Negotiate with multiple potential buyers to get the best offers
- Help you select the buyer who is the “best-fit”
- Manage the due diligence process
- Summarize the relevant terms of the purchase agreement
- Work with your attorney in selection of a buyer and in negotiating final terms
The CIM contains all the essential information about your company such as its services, products, financials, and the market for what you are selling. This is a marketing document, and it is intended to show you how your company will be marketed to potential buyers.
Your attorney works in tandem with you and the other members of your team. He or she will work to organize the information you will need to sell your business and ensure that due diligence has been performed.
Prior to the decision to sell, your attorney can assist you in presale “corporate housekeeping” which involves the “clean up” of corporate records, developing strategies for dealing with dissident shareholders, and shoring up third party contracts.
Your attorney will also want to draft, review, and provide advice and recommendations regarding:
- Existing employment contracts
- Real estate, loans, and equipment leases
- Shareholder agreements, if applicable
- Supply, production, and distribution agreements
- Intellectual property rights
- Employee benefit plans
- Environmental risk assessments
- Underlying litigation risks
- Accuracy of buyer’s financial information and documentation
- Non Disclosure Agreements (NDAs)
- Letters of Intent (LOIs)
- Purchase agreements
Your attorney will also advise you on the benefits and risks of stock versus asset sales and what warranties and representations that buyers will expect.
A prime consideration is if the buyer wants the seller to finance part of the transaction or to guarantee any debt.
At the closing, your attorney will see that all sales proceeds are properly distributed and that all documents, such as deeds and certificates of title to certain pieces of equipment, are properly recorded.
A solid team of professionals will help relieve you of the headaches involved in the sale of a business, and they will help ensure that you get the best price and the protection you will need so that you enjoy your retirement in peace. Let an attorney specializing in business law from Schloemer Law Firm be the perfect adviser for your needs.