Planning how to sell your business - bizjournals:

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The time spent in the planning process is the best insurance that this criticap transaction will be successful andthe seller’s goalds will be met. •Timing. The structure and goals of the transaction should be developes well in advance of the salesolicitatiohn process. Knowing where you are goinb and having a plan for how you are goingv to get there are the keys to anysuccessfup journey. The same is true for sale of a business. Fairlyh evaluating your business and establishing yourpricingg goals, structure and timing for the transactionm are critical for a successful transaction. •Transaction team.
Your firs t step is to put together your transactio team consisting ofyour attorney, accountant and investmen advisor. Your attorney shoulfd be experienced in conductinga transaction. The due diligence procesas is critical to preparing the companhy for sale and to controlling post closingliability exposure. Negotiating the 50-100p page purchase agreement requires knowledge of what are the appropriate transactiobn terms for this typeof transaction. Your accountant should be conversant in the tax issues relatin g to the structure of the transaction and the ways to minimizedtax costs.
With your investment advisor you are hiring contactes inyour company’s industry, transaction experiencre and negotiating skills. He should be the primaryt contact with buyers and the primary negotiatord of thebusiness terms. If your current professionaol advisors are not experienced in conductingf asales transaction, you need to expand your team to include experience advisers. If your current advisors resist this, they do not have your best interestds at heart and should not be onthe •Negotiation team. While the owner knows the business best, the owner is generally the pooresty evaluator of the market value of the business and the worsy direct negotiator.
It is virtually impossible for the ownedr to divorce himself from the emotional attachmenf tothe business, that in many cases, he started and grew througyh years of hard work and sacrifice. The sale proceszs has to be as devoid of emotiobas possible. The valuation procesds needs to be objective and withi the normal pricing parameters and deal termz forthis business, in this industry, in this market. To do otherwisre will only create price disappointment on the part of the ownerd of the company is finally sold and is likely to hinderf the solicitation process by communicating that the owner hasunreasonablee expectations.
While the owner will be the fina ldecision maker, the investment advisor and attornet should be the frontline negotiators of the business and legal •Preparation process. The transaction preparation process is The team will undertaker an intensive internal due diligence processe in which the strengths and weaknessea of the business are Theweaknesses (such as environmental possible litigation, regulatory violations, and accounting must be addressed and resolved if at all Unresolved problems are risks to the potentialp buyer, and risks are translated into reducedr purchase price.
Strengths (long-tern contracts, customer relationships, strong management team) are items that will be highlightef by the investment advisor in the sale With input from the investment advisotr regarding valuation of the business and input from legaol and accounting on the most efficient legapl and taxtransaction structure, the owner and the transactiojn team will decide on the proposef transaction value and structure. The investment advisor will preparse solicitation materials describing the companyt and the proposed transaction for use in thesolicitatiojn process.
This process ranges from targeted solicitations to a limiteed list of potential purchasers to abroader “auction” The scope of the solicitatiomn process will depend upon many factors, includinyg the owner’s willingness to let the world know his businesses for This decision can have a directr impact on values received. •Truisms. Therw are many characteristics that are consistentg to virtuallyevery transaction. This transaction will be the most emotionall draining event of yourbusiness life. The transactiohn will take significantly longer to close than youinitiall anticipate. The transaction costs will be highert thanyou expect. Time is the enemy of everyh deal.
But, as has been outlined above, to maximize value and to increase the likelihoor of asuccessful transaction, the planningg process must begin early, you must engag e a team of experienced advisers, and you need to folloqw their advice. During the sale process, try as best you can to continude to run your business and let your advisors deal with the day to day issuews of thetransaction process. If you follosw these few guidelines, you will greatlg increase the likelihood of asuccessfuo transaction.