Read part one here.
Libby: Who should a business owner engage as a part of his/her sell team to market their business for sale and at what point in the process? I know as an attorney, I like to be involved as early in the process as possible in order to help ensure the record books are up to date, the company has the appropriate non-disclosure agreements ready to provide potential buyers and just generally assist in the sale process.
Jon: I agree that advisors should be introduced to the process as early as possible. Before starting any kind of formal sale process, I highly recommend that a business owner engages with a financial advisor who can prepare a plan which demonstrates the various financial scenarios that can result from a sale. These reports are extensive and take into account possible sale prices, taxes, investments, economic conditions, etc. The Company’s accountants should be made aware of a possible sale to ensure that the financial statements are current and will stand up under exam. Internal statements and cash-based accounting will not meet the requirement. Tax accountants can prepare an analysis of the impact on selling stock vs assets. Also, most of our deals now involve a sell-side quality of earnings report which is typically completed early in the sale process by an independent third-party accounting firm.
As an investment banker, I prefer being introduced to the opportunity as early as possible to help think through the critical issues that need to be addressed pre-sale, then engage fully when the time comes to launch the sale process. We are often consulted by potential sellers at the outset to help build the advisory team.
And last but not least, we strongly recommend that owners hire experienced M&A attorneys before launching the process. In addition to providing specifics around the documentation process (NDA, LOI, purchase agreement) that will be required, our experience has been that legal advisors can help eliminate potential pitfalls throughout the process and generally are better positioned to add value when involved from the beginning. It can be difficult for any advisor to parachute into a process mid-stream and get up the learning curve when many key deal points have already been negotiated.
Read the entire post here: I Have Decided to Sell My Business, Now What?