Selling a business isn’t just a transaction, it is a major milestone that requires thoughtful planning, strategic preparation, and the right team of advisors by your side. Whether you’re looking to exit in the near future or simply want to be ready for when the time comes, laying the groundwork now can dramatically impact the outcome.
1. Know Your Numbers
Before entering any negotiations, you need a clear, accurate picture of your business’s financial health. Work with your accounting team to review and recast your financial statements, adding back non-cash or personal expenses. This process not only helps you understand your bottom line but also highlights trends in revenue, cash flow, and profitability. Even if you’re not planning to sell immediately, maintaining clean, updated records can uncover operational improvements and strengthen your position when it is time to sell.
2. Assess Your Financial Preparedness
Selling your business will likely be one of the most significant financial events in your life. Evaluate whether the sale proceeds will comfortably support your desired lifestyle post-sale. Consider all aspects of your future financial needs—from retirement income and living expenses to potential debts and unforeseen costs. It is wise to work with a financial advisor who can help you model various scenarios, ensuring that the sale will meet your long-term financial goals.
3. Tackle Your Tax Planning Early
Tax implications can greatly impact your net proceeds from the sale. Engage with tax professionals well before the sale to explore strategies that minimize your tax liability. Whether it’s addressing potential estate tax issues or setting up tax-efficient structures like F-Reorganizations, Grantor Trusts, or Grantor Retained Annuity Trusts (GRATs), early tax planning is essential. By taking proactive steps now, you may save significantly, keeping more of your hard-earned wealth.
4. Choose Your Exit Team
Your exit team plays a pivotal role in the success of your sale, far beyond the scope of a single M&A advisor. Assemble a group of trusted professionals who specialize in different facets of the transaction:
- Wealth Advisor: Guides you through planning your retirement and managing your future lifestyle, ensuring that the sale aligns with your long-term financial goals.
- M&A Advisor: Helps determine the market value of your business and strategizes the sale to attract the right buyers.
- Attorney: Provides legal oversight, ensuring that all contracts and negotiations are in your best interest.
- Tax Advisor: Works closely with your team to craft tax-efficient strategies that can significantly reduce your liabilities.
This well-rounded exit team should coordinate efforts and serve as your advisors throughout the entire process, ultimately maximizing your return and facilitating a smooth transition.
Preparing your business for sale requires clarity, strategy, and expert guidance. By knowing your numbers, assessing your financial readiness, planning for taxes early, and assembling a strong exit team, you set the stage for a smoother, more rewarding transition. If you are interested in an introductory discussion, do not hesitate to contact us.
Disclosure:
This material is provided by Gryphon Financial Partners, LLC (“Gryphon”) for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Facts presented have been obtained from sources believed to be reliable. Gryphon, however, cannot guarantee the accuracy or completeness of such information. Gryphon does not provide tax, accounting or legal advice, and nothing contained in these materials should be taken as tax, accounting or legal advice. Individuals should seek such advice based on their own particular circumstances from a qualified tax, accounting or legal advisor.