Wealth management is about making smart decisions with our wealth in order to achieve all that is important to us. We would argue that wealth in itself isn’t enough to help us achieve our goals and dreams. We must be proactive in managing taxation, investing, as well as the spending of wealth in order to achieve a high confidence strategy.
Developing your team is Critical Step Two in the process of selling your business. Part One focused on developing your exit strategy. Your team will typically consist of a CPA, a transaction attorney, a financial adviser, an M&A firm, and an estate-planning attorney. If you are the typical CEO we’ve dealt with, then millions of dollars are on the line when you are in the process of cashing-out. You should, therefore, choose the right advisers very carefully.
Beware: The biggest beneficiary from the sale may be Uncle Sam. Taxes can eat most of your proceeds if you aren’t careful, but with proper planning, you may pay very little taxes.
Exit-strategies advisers know how to:
- Help you establish and quantify realistic exit objectives.
- Determine not just value, but a likely sale price for your company.
- Create or enhance the value drivers in your company.
- Expedite the sale process by avoiding mistakes and solving challenges.
- Level the playing field so that the buyer’s advisers don’t outperform yours.
- Minimize the IRS tax bite.
- Design and implement wealth transfers to subsequent generations.
- Tell you when you are not ready to sell your company.
When locating your team of professionals you’ll want to know that they understand and specialize in helping entrepreneurs with the exit process. If they don’t then they’ll certainly acquire a great deal of expertise in working on your sale but you will be the one paying for their education – and it will be a very expensive education.
These specialists are involved at an early stage as they help come up with credible sales documents, research and vet potential buyers, assist with pre-sale grooming, and negotiating a sale on your behalf.
A business advisory team will handle the time-consuming process, which gives you time to focus on other aspects of the business.
Your investment banker should be a specialist in your industry. He or she will find, qualify, and, in some cases, interview the buyers for you. Investment bankers usually require a monthly retainer in addition to a success fee at the close of the deal.
A financial adviser grooms the company for a sale, advises on the timing of the sale, advises on the value of the business, which includes maximizing the sale price. He’s also tasked with making sure that the information memorandum is enticing to the buyer, identifying potential purchasers, and advising on tax consequences.
Your financial adviser helps assemble the advisory team, gathers information, and facilitates meetings during the early stages of the exit-strategies process. He will help you determine the sum of money you need from a sale to attain financial security. He also typically works with you years after the sale is done. Although you probably already have a financial adviser, it would be critical to use an exit-strategies specialist when selling your business.
An accountant or auditor plays a critical role in the sale process. When determining the value of your business, an auditor will need to check the files and use various valuation methods to come up with a number. You can opt to use an existing auditor or accountant, the key is to have someone that will help you maximize the value of the sale.
A transaction attorney specializes in executing transactions. She knows what’s happening in the marketplace and how to keep a deal moving toward a close. She also provides the horsepower you will need to level the playing field. Buyers arm themselves with highly experienced transaction professionals. To ensure yourself a fair shake, you must do the same.
Questions to ask potential professional advisers:
About the firm
- What investment banking services do you provide? Which ones are your core services or strengths?
- What is your past experience?
- What makes your firm different and better?
- Who will be staffed on the assignment for our company?
- Can I speak with some of your past clients?
- How do you charge for your services and why is this fair compensation?
- Why should our company hire you and your firm?
Know the market
- What do you know about the (your industry)?
- Please explain the depth and breadth of your relationships with buyers, sellers, financiers, investors, and other professional services providers serving my industry.
- How can you help me to market the business?
- Do you have contracts among potential buyers>
- What references can you provide?
- What will be done in advance to prepare our business for the sale?
- What are the steps in your deal process and how long does it take?
- What proprietary resources or intelligence does your firm have to facilitate the success of the deal?
- How does your deal process differ from others and why is it prone to generate better results?
- In the deal process, what can I expect you to do and what am I expected to do?
- what are the fees involved and what do they cover?
- Will you keep the sale confidential?
- How can you help me after the deal is finalized?
- In your mind, what are the keys to a successful transaction?
When working with a firm of advisers, it’s critical to ensure that you are comfortable dealing with them and discussing your sale. A financial advisor in Sarasota needs to be in your line of business as opposed to being a jack of all trades. Don’t hesitate to reach out to Pillar Wealth Management with any questions or concerns about your experiences or your portfolio.
Christopher G. Snyder and Haitham “Hutch” E. Ashoo are principals of Pillar Financial Services in Walnut Creek. Contact them at 925-356-6780.