The Long Run: Preparing for a Successful Business Sale

Preparation and endurance matter, whether you are training to run a marathon or preparing to sell your business. As with any good training program, the work you do ahead of time can determine the outcome. In our experience, proper planning can significantly impact marketability, after-tax proceeds, family dynamics, and long-term security.

Here are some key considerations if you are thinking about selling:

What drives your decision?

Business owners sell for a variety of reasons, including industry-specific pricing opportunities, the desire to diversify, family alignment, and retirement. We find that defining the “why” from the outset helps drive better decisions and sets the tone for what can be a highly emotional process. The timing, structure, and even the ultimate price of a transaction are also impacted by the purpose for the sale.

Preparing for your sale

Optimizing value will be at the forefront of a business owner’s mind when going to market, but to do so requires the company to be positioned appropriately. In addition to achieving operational excellence, a seller will want to ensure that a company’s books, records, and financial statements are in order. A purchaser will want to review these items, so sellers must have their houses in order. Buyers value preparation.

Additionally, structure determines outcomes. Ensure you do pre-transaction planning with respect to entity type and ownership structure to achieve your goals. Establishing trusts, making strategic gifts, and undertaking charitable planning ahead of time can save millions of dollars over time. Waiting until a deal is imminent is often too late.

Have the right team

Surround yourself with the right people. A team of trusted professional advisors should be involved with the sale of any business and will typically include investment bankers, lawyers, tax accountants, and financial advisors. This team will represent your interests in the sale process, helping to ensure you and your family receive the best terms possible.

Look ahead

It is important to remember that selling your business is not the finish line. Rather, it is the start of a new chapter.

Managing the proceeds in a way that aligns with your goals is just as important as the sale itself. Whether it is trust and estate planning, tax strategy, investment management, philanthropy, or engaging the next generation, your team at Tolleson is here to help.