Selling or transferring your business can be one of the most important decisions that you will have to make in your life. When the day comes when you decide to sell your business‚ the first question most business owners ask is who do I need to hire to get my business sold. The “team” you need to hire will depend largely on the specific circumstances of your business sale or business transfer. For example‚ if you are selling your interest to a current employee within your organization or you are passing your business to your son or daughter‚ you will not need the services of a business broker to locate prospective purchasers. The following is a general list of professionals you will need to contact once your decision to sell your business is made:
- Business Broker or Investment Banker
The first call you will make is will likely be to a business broker or investment banker‚ depending on the transaction type. This is probably the right call to make. I have had some clients who attempt to try to sell a business on their own‚ in order to save some money on commissions. This is a big mistake! Business brokers and investment bankers have experience selling businesses and are an irreplaceable resource when selling your business.
- Business Accountant
The accountant will need to review your records and advise you on the best structure for your business sale tax-wise. For example‚ typically‚ a business sale will prescribe an allocation of the purchase price which is a breakdown of what the purchase price is being applied towards. Depending on the allocation‚ you will be responsible for certain taxes associated with the sale. Additionally‚ during the sale process‚ a bulk sale notice will be filed and the government (as always) will be looking to make sure that all of your taxes are up to date.
- Business Attorney
The attorney will be the person responsible for making sure that you walk away from the business sale without any further liabilities and with all of the money that you intended to walk away with. The attorney’s functions will be many and will include (i) negotiating‚ drafting and reviewing all of the relevant agreements you will be signing to effectuate the transfer of ownership; (ii) intergrading all of the suggestions by your other team members into the transaction to properly cover all bases; (iii) procuring all information on the outstanding liens on your business and properly disposing of them; (iv) properly filing the bulk sale notices with the relevant government agencies and complying with their instructions; (v) properly disposing of your exposure associated with your leasehold interest or properly selling the real property associated with your business to limit exposure; (vi) ensuring that the documents associated with any financing you will be providing to the purchaser of your business are properly drafted and recorded to ensure full repayment; (vii) reviewing all contracts associated with your business and making certain that they are properly terminated or otherwise disposed of; and (viii) conveying all of the information to you to make sure you understand the process and are fully agreeable with the obligations set forth in the agreements.
Hiring an appraiser may be beneficial in certain circumstances to fully understand the value of certain parts of your business. For example‚ you may need to hire an equipment appraiser should your business equipment be an essential part of your sale.
- Insurance Broker
You want to make sure that you are protected from any potential liability following the closing. Also‚ you want to make sure that you do not pay any unnecessary premiums following the sale. An insurance broker can help you go over your insurance necessities and properly cancel any existing policies.
- Financial Planner
Some individuals would benefit from the advice of a financial planner to properly invest and protect the proceeds of the business sale or set out a plan from the beginning of the business sale process.
- Other Accountants and Attorneys
The accountant and attorney you retain for the business transaction may not have expertise in other accounting or legal areas. If they do not‚ you may need to seek the guidance of another accountant or lawyer. For example‚ you may want to revise your estate plan following the sale of your business and you should seek the counsel of an experienced estate planning attorney to revise your will and setup trusts to protect your assets.
Choosing the right personnel is critical to ensuring that your transaction is done properly‚ limit exposure from others and maximize the value you get for your business. There may be other individuals that would be added to this list and there may be others who you can exclude‚ depending on your specific transaction. Either way‚ hiring the right personnel to assist with your business sale cannot be overlooked.