The 5 Must-Have Expert Advisors for Your Business Sale Team
8 Essential Tasks That Ensure the Most Optimized Outcome for Your 8, 9, or 10-Figure Business Sale
If you own a successful 8, 9, or 10-figure business and are looking at selling it in the next 5-10 years, now is the time to start working out the details. Yes – doing this right will take time. To achieve maximum value and as stress-free a business sale process as possible requires first developing an exit strategy and then assembling the right team.
For the second step, though each merger and acquisition is different, you’ll likely want to assemble a team that includes at least the following five specialists:
- Financial advisor
- Investment banker
- Transaction attorney
- Business lawyer
As you are about to see, each of these people plays a distinct role in helping you complete the most successful and rewarding business sale process possible. They will see things you won’t see. They’ll know questions to ask you haven’t thought about. They’ll protect you from getting a raw deal. And they will help ensure the business M&A process goes as smoothly as possible.
In a bit, we’ll detail what each specialist on your business sale team does as part of the process. Armed with that information, you will be able to seek out the best experts for your team. You will know what to look for in the vetting process.
But first, here’s a quick rundown of eight essential tasks these five expert advisors will help you accomplish so you have the best possible business sale experience.
8 Goals for Your Business Sale Team of Experts:
Help Establish and Quantify Realistic Objectives
Your livelihood, emotions, and perhaps even your identity are so intertwined with your business that it will be very difficult for you to approach this process objectively at all times. You need people on your team who will stick to the process they have used effectively with their previous 8, 9, and 10-figure business sale experiences.
You need people who can keep you tethered to your priorities and goals.
That begins by having quantifiable and realistic objectives that your team helps you clarify.
Determine Your Net Value and Likely Sale Price
These are not the same thing. Your advisor specialists will have a better feel for the mergers and acquisitions market than you will. If they determine your business has valuable upside, you may be able to sell it for more than the net value. Or, they may find that a new business owner may have trouble duplicating your success and will be unlikely to pay for the full net value.
You’ll need help figuring this out so you know what to expect as you engage with potential buyers.
Create and Enhance Value Drivers of the Company
Are there ways to increase the value of your company before you formally begin the business sale process? Can you increase its value before engaging with prospective buyers?
Your team will take a fresh look at your business with an experienced set of eyes and an outside perspective. They may identify some untapped sources of value you haven’t capitalized on.
This is one reason why you want to begin exploring the sale of your 8, 9, or 10-figure business years before you actually hope to sell it. Suppose your team identifies three areas you should develop that will increase the value of your business in the eyes of a buyer.
It’s not uncommon for those sorts of changes to take a couple years to implement. It might be a new sales process, hiring and developing a couple new positions, or leveraging automation in your marketing and customer acquisition. Many such improvements can be identified in most businesses, but few can be implemented quickly.
Your business sale team will help you identify these.
Expedite the Process by Solving Problems, Avoiding Mistakes
Inexperienced advisors will make the same mistakes you would have made trying to sell your business on your own. You will miss key steps and have to backtrack. You will not realize some of the issues you should have dealt with before starting negotiation.
Selling an 8, 9, or 10-figure business is not simple or easy. But an experienced team will make it go smoother and faster than if you try to do it all on your own. This is also why you should develop your business exit strategy first.
Level the Playing Field so Buyer’s Advisors Don’t Outsmart You
The buyer will have their team of experts too. Your team and their team will hash out a lot of details during the negotiation process. If your team isn’t up to the task, you could end up leaving lots of money on the table.
But money isn’t the only thing you could lose. Unfavorable terms could leave you filled with regret once the M&A is complete. There are many more issues besides money to negotiate as part of a business sale. Your exit strategy planning will help you identify these.
Minimize or Eliminate the Tax Bite
Both buyer and seller have a shared interest in this priority. Your team needs to know how to achieve the best possible tax deal resulting from your merger or acquisition. You can’t rely on the buyer’s team for this.
Find the right people for your business sale team, and you could reap six or seven figures more (depending on business size) than you otherwise would have.
Design and Implement Business Wealth Transfer to Heirs
Your age and family situation play a large role here. How and when you transfer wealth to your heirs has tax consequences as well as many other intricacies that must be discussed and worked out.
During the sale of your business is the ideal time to settle some of this.
Tell You – Honestly – If You Are NOT Ready to Sell
This may be the most important one of all. You need someone who will shoot straight with you, even if it’s hard to hear.
Many businesses are heavily owner-dependent. When an owner of such a business tries to sell, they can become quite disheartened to learn they won’t be able to sell for nearly as much as they think the business is worth. This is because the new owner will not be able to replicate what the original one was doing. They may lose a large portion of their customer base, who were loyal only to the original owners.
Besides being owner-dependent, several others factors can complicate your efforts to sell. You need a team of experts who will be honest with you, and who have solid numbers and experience to back up what they’re saying.
So – let’s explore briefly who these business sale experts are, and what qualities you want to look for when assembling your team.
5 Business Sale Experts to Comprise Your Team
The financial advisor is your point person. He assembles the team, collects the relevant information, and runs the meetings.
One of the financial advisor’s most critical tasks is to determine the minimum net business sale price that will help you attain the financial security you desire. How much you need to sell it for may or may not align with how much you are able to sell it for.
The financial advisor will also help you with the estate planning tasks that result from your business sale. And, once the sale is complete, he will help you manage your wealth to stay financially secure, indefinitely.
You need a financial advisor with specialized experience helping CEOs and business owners with the business sale and exit process. You do not want to pay for them to learn this on the job. That’s a costly way – for you – to give a newbie some experience, because they will not be prepared to effectively complete the tasks you just read through a moment ago.
Pillar’s wealth advisors have extensive experience in this regard. We have worked with numerous 8, 9, and 10-figure business owners and CEOs with mergers and acquisitions in the San Francisco Bay Area from Palo Alto and San Jose to Walnut Creek, and have produced stellar outcomes that kept them at ease through the process, happily satisfied at its ending, and contentedly enjoying their next stage of life.
Find Out if Pillar Is the Right Financial Advisor for Your Business Sale Team
The investment banker performs some of the most critical tasks in finding buyers for your business. She locates and qualifies your prospective buyers.
An experienced investment banker will know the players in your area or industry, have contacts she can reach out to, and have the capacity to create a ‘frenzy’ of sorts, much like a real estate agent tries to achieve when selling a property.
The right investment banker for you should specialize in your price range and know your geographical area (if relevant).
When looking for a banker, ask about things like:
- Their core services and strengths
- Past experience – especially in your industry
- What differentiates them from other firms
- If you can speak with any of their past clients
- How much they charge – the most common arrangements are monthly retainer fees and additional payments for a successful closing
- Their relationship with buyers, sellers, financers, and investors
- How their business M&A process works and why it’s superior to others
The transaction attorney is another person you must consult with before you begin the selling process.
They specialize in executing business sale transactions because they know the market, understand how to keep the deal moving, and know how to level the playing field with the buyer. The transaction attorney plays a critical role in ensuring you get a good deal, and is your go-to player for negotiating with the buyer’s team. He keeps you from getting a terrible deal.
Accountant and Business Lawyer
You probably already have these last two core members of your business sale team. Your CPA and business lawyer know your company from the inside out, so their perspective and insight during the business sale negotiation process will be essential.
They will be able to answer questions from the buyer and make sure all your numbers, assets, and details are accurate.
A Warning about Assembling Your Business Sale Team of Specialists
The most common scenario will be that you’ll assemble your team, and that most of them will not have worked together before. These specialists tend to be independent. In other words, you will likely not find your financial advisor, investment banker, and transaction attorney all working at the same company. They will be operating their own offices.
The risk here is that they need to be able to come together and unite around your business sale goals, objectives, and processes.
That’s why, if you haven’t already picked up on it, finding specialists with deep experience in business mergers and acquisitions similar to yours (in industry, size, or location, whichever is most pertinent) is probably the single most important factor in deciding who to work with.
With this experience, they will be able to quickly gel as a team, recognize each other’s strengths and knowledge, and be able to trust each other to fulfill their part of the process.
On the contrary, if you have even one member who is ‘out of their league’ on your 8, 9, or 10-figure business sale deal, they will probably slow the process down and increase the stress and uncertainty of success. This will frustrate you as well as the other members of your team.
So make it a priority to carefully vet your team before hiring them.
For the financial advisor on your team, Pillar has extensive experience helping our clients sell their 8, 9, and 10-figure businesses.
In the course of that experience, we have developed relationships with many specialists in these other areas, and we know some who possess the high level of professional expertise you will be counting on. Depending on your business’ specifics, we may be able to recommend a few to you.