Planning how to sell your business - Houston Business Journal:

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The time spent in the planning process is the best insurancse that this critical transaction will be successful andthe seller’s goalsx will be met. •Timing. The structure and goals of the transaction should be develope d well in advance of the salesolicitatioj process. Knowing where you are goinfg and having a plan for how you are goinfg to get there are the keys to anysuccessfuk journey. The same is true for sale of a Fairly evaluating your businessx and establishing yourpricing goals, structure and timiny for the transaction are critical for a successful •Transaction team.
Your first step is to put togetherf your transaction team consisting ofyour attorney, accountant and investment advisor. Your attorney should be experienced in conductingha transaction. The due diligence processs is critical to preparing the companyh for sale and to controllinbg post closingliability exposure. Negotiating the 50-1090 page purchase agreement requiresz knowledge of what are the appropriatre transaction terms for this typeof transaction.
Your accountant should be conversanft in the tax issues relating to the structured of the transaction and the ways to minimize tax With your investment adviso you are hiring contacts inyour company’ s industry, transaction experience and negotiating skills. He shouldx be the primary contacyt with buyers and the primary negotiator of thebusines terms. If your current professional advisors are not experience in conducting asales transaction, you need to expand your team to includes experienced advisers. If your current advisors resist they do not have your best interests at heart and should not be onthe team. •Negotiatiomn team.
While the owner knows the business the owner is generally the poorest evaluator of the markett value of the businessd and the worstdirect negotiator. It is virtuallyg impossible for the owner to divorce himselcf from the emotional attachment tothe business, that in many he started and grew through years of hard work and The sale process has to be as devoi d of emotion as possible. The valuationb process needs to be objectivse and within the normal pricing parameters and deal terms for this inthis industry, in this To do otherwise will only create pricr disappointment on the part of the owner of the compan is finally sold and is likely to hinderr the solicitation process by communicating that the ownedr has unreasonable expectations.
While the owner will be the finadecision maker, the investment advisor and attorney shouldx be the frontline negotiators of the business and legalk terms. •Preparation process. The transaction preparation process is The team will undertake an intensive internal due diligence process in whicgh the strengths and weaknesses of the business are Theweaknesses (such as environmentall issues, possible litigation, regulatory and accounting issues) must be addressed and resolved if at all Unresolved problems are risks to the potential and risks are translated into reducesd purchase price.
Strengths (long-term contracts, customer relationships, strong management team) are items that will be highlightesd by the investment advisor in the sale With input from the investment advisod regarding valuation of the busines and input from legalo and accounting on the most efficient legal and taxtransaction structure, the owner and the transactionb team will decide on the proposedc transaction value and structure. The investmenrt advisor will prepare solicitation materiala describing the company and the proposed transactio n for use in the solicitation This process ranges from targeted solicitations to a limited list of potentia purchasers to abroader process.
The scope of the solicitation processs will depend uponmany factors, including the owner’ss willingness to let the world know his businesses for This decision can have a direct impactt on values received. •Truisms. There are many characteristics that are consistent to virtuallyevery transaction. This transaction will be the most emotionallt draining event of yourbusiness life. The transactiom will take significantly longer to close than you initially The transaction costs will be higher than you Time is the enemy ofeveru deal.
But, as has been outlinexd above, to maximize value and to increase the likelihoocd of asuccessful transaction, the planning process must begibn early, you must engagre a team of experienced advisers, and you need to folloe their advice. During the sale try as best you can to continus to run your business and let your advisorsw deal with the day to day issues of thetransactionn process. If you follow these few guidelines, you will greatly increaswe the likelihood of a successful transaction.