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Assembling the Right Team of Experts to Sell Your Company

Selling a Lower Middle Market Business? Build Your Team

For many business owners, the sale of their company is the largest financial transaction in their lives, and critical to their ongoing wealth creation. That is why it is important that owners, particularly those selling a business worth over $1 million, use a multi-disciplined team to structure and execute the transaction.

The transaction team typically is comprised of a CPA, business attorney, intermediary, and wealth management professionals. Exit planners can also assist. It is important that each team member be skilled in personal financial planning as their ability in this regard will likely influence the deal structure.

According to Guy Asadorian, a Private Client Advisor at Bank of America Private Bank who works with wealthy individuals and multi-generational families with a focus on business owners, “It’s important to work with a wealth management advisor both prior to a transaction and after. Many business owners jump into the process of selling without the proper financial planning. Owners don’t want to find themselves in a position where they have gone through the process of selling only to realize at the 11th hour that the sale proceeds won’t generate enough income for them to live off.”

Financial planning consists of more than just valuation and sale price. The sale team of professionals should help the owner build a solid strategy that will achieve an optimal tax-advantageous transaction. They will also maintain the confidential nature of the process to avoid expensive disruptions with employees, customers, vendors, and even competitors. For these reasons and others, a strong team is an advantage for a seller and will help them sell with confidence.

Get the Right Mix of Skill Sets

The complexity of the sale process is often tied to the complexity of the business, as well as the personality and goals of the business owner. Family issues, such as death or divorce, may also complicate the selling process. Managing the selling process requires a wide range of skill sets often exceeding those of the business owner. The team should compensate for skill set gaps of the owner and ideally the team members will complement each other. Do not be concerned about style differences or disagreements among the team members – it worked for The Beatles.

The Team Approach to Selling your Middle Market Business:

  • Identify, Evaluate, and Select the Team Members. Get referrals from lenders, attorneys, and successful businesspeople, then interview the candidates. List and prioritize the qualities you need in your team members, perhaps designating such qualities as either essential or non-essential. Once roles are decided, you need to create introductions among the team members and define responsibilities.
  • Keep managing and growing the business during the selling process. Downturns in business conditions can affect perceived value by buyers so keep your company steady and on track during the process. Avoid giving buyers any opportunity to reprice or restructure a deal in what will be a time-consuming process. You’ll need to delegate to your transaction team and keep your focus on managing your business.
  • Get verifiable financial statements organized for at least three prior years and YTD. Clean up the company balance sheet and have an accurate major asset list ready for buyers and possibly equipment appraisers.
  • Get a third party credentialed business appraisal from an expert. You will need an impartial business appraisal to set the asking price and defend it using multiple valuation methods and industry comps.
  • Get a legal review. Depending on the complexity of the business, you may want to engage an upfront legal review prior to formally listing the company for sale. This is especially important if you have business partners or other shareholders.
  • Select a business broker or merger & acquisition intermediary to represent you. They will work with you to create a strategy to confidentially market your business and qualify buyer prospects.
  • Establish the asking price and deal structure — and the strategy to defend it. A business appraisal is a major advantage for sellers in supporting the asking price. Smart sellers often have a one to three-year business plan ready to show to buyers. Even a bulletized summary of how the company currently generates cash and the realistic upside from new initiatives will assist in the selling process.

Deal Structures and Tax Considerations

  • Review deal structure and tax considerations before listing the company for sale. Deal related tax considerations should be reviewed early in the process with your CPA. Your CPA can advise you of your tax basis in the company, as well as for any real estate in the transaction, and you can then estimate your potential State and Federal tax obligations. This will allow you to estimate your after-tax gains in potential deal structures.
    Do this as early as possible in the process as it is very important in a shifting tax code environment. Especially with changes in the long-term capital gains tax always looming in Washington D.C. You might also consider a deal structure that includes financial benefits to family members and key employees.
  • Consider the timing of a gift-tax-efficient transfer. A gift of a business interest executed prior to the sale of a business may have an appraised value less than the value you receive from a sale. Have your CPA or tax Attorney advise as how to execute a gift-tax-efficient transfer. The value may be lower due to two different discounts – lack of control and lack of marketability.
  • Maximize your gains. Your team can work with you to maximize your gains (tax advantageous strategies, trusts, 1031 for real estate, charitable donations & contributions) and make sure the deal structure matches up with your personal financial plan.
  • Review restrictions of any non-compete agreements. If a non-compete agreement is required of you when you sell, what are the restrictions and for how long? Selling to a strategic buyer or a financial buyer can influence the deal structure as a seller may be required to stay on post-closing in a consulting capacity, generally at a strategic level, after a period of management transition. Work alongside your CPA, attorney, and wealth management professional to understand the impact the deal structures may have on ordinary income or capital gains. If SBA financing is involved, stay alert to SBA rules regarding how long a seller can receive income from a buyer after closing.
  • Review the benefits of any estate planning options. Understand tax advantageous options such as grantor-retained annuity trust (GRAT) and the sale of business assets, as well as the intentional defective grantor trust (EIDGT) in exchange for a note. This is an estate planning tool structured as a trust that may allow you to transfer the upside potential of an asset rather than the asset itself.

The Selling Process Can Be a Roller Coaster Experience

It can get bumpy when selling a business, so let logic override emotion. The intermediary is often an important layer of insulation with buyers if the deal tone gets too emotional. Good communications, including deal management, punch lists, and due diligence lists, will help you manage the transaction. Due diligence by buyers has been aptly compared to a detective activity in which information is verified and problems, real or potential, are uncovered. You’ll need accurate financial statements and operational information to avoid perceived problems by buyers.

Face-to-face meetings with buyers and their representatives are generally helpful, especially if protracted angry email chains are occurring. Due diligence review meetings should be scheduled at least once per week to keep the deal on track and avoid miscommunications. Hold your transaction team accountable for their responsibilities. Document all key points in writing.

After the Closing

Your world will be different after the sale. You will need to assist with a mutually agreed upon management transition, and then possibly stay on consulting at a strategic level.

Deal structures with earnouts and consulting offer the potential to defer some of the income and capital gains taxes but are likely to be taxed as ordinary income. Make sure you understand the current SBA time limitations if staying on after a closing.

Post-Sale Wealth Management

Your advisors, especially your wealth management professional, can help you create an investment plan tailored to your own investment return and income targets.

“An experienced Wealth Manager will be able to advise you on all aspects of your financial life. This includes, among other things, the proper investment vehicles, and allocations to generate the income you need to satisfy your lifestyle. It also includes managing your philanthropy, help with estate planning services and engaging the next generation in family financial matters,” adds Guy Asadorian.


One thing is for certain, things will be different than we think. Sellers should have a flexible exit plan with options — which may even include buying another business.

Watching the sale of a larger company through the lens of business brokerage is an often a very good opportunity to observe the decision making of successful entrepreneurs — including the quality of the team they select to advise them.

Originally Posted at on June 5, 2023

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