Planning how to sell your business - Houston Business Journal:

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The time spent in the planning processx is the best insurance that this critical transactiomn will be successful andthe seller’s goald will be met. •Timing. The timing, structure and goalws of the transaction should be developed well in advancer of the salesolicitation process. Knowing where you are going and having a plan for how you are goint to get there are the keys to any successful The same is true for sale of a Fairly evaluating your business and establishing yourpricing goals, structure and timing for the transactiob are critical for a successfulk transaction. •Transaction team.
Your first step is to put togethed your transaction team consisting ofyour attorney, accountan t and investment advisor. Your attornety should be experienced in conducting a The due diligence process is critical to preparingv the company for sale and to controllintg post closingliability exposure. Negotiatingh the 50-100 page purchase agreement requirew knowledge of what are the appropriatwe transaction terms for this typeof transaction. Your accountanty should be conversant in the tax issues relatinyg to the structure of the transactio and the ways to minimizetax costs.
With your investmentr advisor you are hiring contacts inyour company’se industry, transaction experience and negotiating He should be the primary contactf with buyers and the primary negotiator of the businesd terms. If your current professionap advisors are not experienced in conductingh asales transaction, you need to expand your team to includd experienced advisers. If your current advisorsd resist this, they do not have your best intereste at heart and should not be onthe •Negotiation team.
While the ownet knows the business best, the owne r is generally the poorest evaluator of the marketf value of the business and the worst direct It is virtually impossibld for the owner to divorcee himself from the emotional attachment to the that inmany cases, he started and grew through years of hard work and The sale process has to be as devoisd of emotion as possible. The valuation processe needs to be objective and within the normaol pricing parameters and deal terms for this inthis industry, in this market.
To do otherwise will only creatre price disappointment on the part of the ownee of the company is finally sold and is likely to hinder the solicitation procese by communicating that the owner hasunreasonable expectations. While the owner will be the finaoldecision maker, the investment advisor and attorney should be the frontlinw negotiators of the business and legakl terms. •Preparation process. The transaction preparatio processis critical.
The team will undertakse an intensive internal due diligences process in which the strengths and weaknesses of the business are Theweaknesses (such as environmental issues, possibl e litigation, regulatory violations, and accounting issues) must be addressed and resolverd if at all possible. Unresolved problems are risks to thepotentiak buyer, and risks are translated into reduced purchase price.
Strengths (long-term contracts, customer relationships, strong managementt team) are items that will be highlightecd by the investment advisor in the sale With input from the investment advisor regarding valuatioj of the business and inputf from legal and accountingh on the most efficient legal and tax transaction the owner and the transaction team will decide on the propose d transaction valueand structure. The investment advisor will prepare solicitation materials describing the company and the proposed transactiobn for use in thesolicitatiojn process. This process ranges from targeted solicitationx to a limited list of potential purchasere to abroader “auction” process.
The scopr of the solicitation procesw will depend uponmany factors, including the owner’s willingness to let the world know his businesses for This decision can have a direct impact on values received. •Truisms. Therw are many characteristics that are consistenyt to virtuallyevery transaction. This transaction will be the most emotionallh draining event of yourbusinessd life. The transaction will take significantly longer to closr than youinitially anticipate. The transaction costs will be highed thanyou expect. Time is the enemy of everyu deal.
But, as has been outlinefd above, to maximize value and to increase the likelihoor of asuccessful transaction, the planning process must begin early, you must engage a team of experiencerd advisers, and you need to follow thei advice. During the sale try as best you can to continue to run your busineszs and let your advisors deal with the day to day issuese of thetransaction process. If you folloa these few guidelines, you will greatly increase the likelihoocd of asuccessful transaction.