With the Rio Olympics just completed, much was made of the USA Men’s and Women’s basketball “Dream Teams” for the caliber of the talent assembled. There was no doubting the quality of each of those teams, groups where the last player on the team was probably as good as or better than the strongest players on other nations’ teams.
When it comes to assembling your team of professionals and advisors to help you with selling your business, I strongly urge you to build your own Dream Team in order to ensure your greatest odds of success, i.e., winning your own “gold medal” deal.
How do you assemble your team and who should be on it may vary slightly depending upon the size of deal you are looking to make, but in general, the following are the “players” you need on your Dream Team.
Deal Making Attorney
All too often, clients tell us they plan to use their best friend, a real estate or estate planning attorney, to represent them in the sale of their business. We ask the client, “If your spouse needed brain surgery would you hire a heart specialist to perform the operation?” Deals today have become more complex and the negotiations involved are much more detailed. Assuredly, the buyer will have an M&A legal specialist on their team and you need one on your side. Many of our clients engage an M&A attorney specifically to represent them in the transaction. As my father always taught me, “You never want to get out-lawyered in a deal.”
CPA With Transactional Experience
Almost every business owner has a great relationship with their CPA. Your accountant is a vitally important member of your deal team. Just like your M&A attorney, you need to determine if your long-time CPA has transactional experience. The way in which a transaction is structured can have a huge impact on the cash which remains in your fist after the deal is done. Your CPA must be up on all relevant tax laws in order to maximize your “cash in fist” (as we call it). Recently, we were working on a deal in Iowa with a selling client. The client’s CPA was a wonderful old gentleman in his late 70s and had not worked on many business sale transactions in his career. He was unaware of a change in Iowa tax law which would allow his client to avoid any state income tax on the deal if the transaction was structured properly. Luckily, we at CFA were aware of the revision to the tax code and could advise our client accordingly. Had we not intervened, our client would have ended up paying $250,000 in unnecessary state income taxes.
Financial/Wealth Planner
Once you get your cash in fist, what are you going to do with the money? You need to work with a reputable financial/wealth planner long before you sell your business not only to help you determine where to invest your hard-earned funds, but to also help you understand just how much money you need to achieve your financial/retirement goals. A good financial/wealth planner who has experience with business owners who have sold their businesses will also be able to assist your CPA with tax planning ideas.
Your Family
Several years ago, we were asked by a business owner to sell the family business. Although the CEO and his wife owned 100% of the stock of the company, their kids and grandkids were all involved in the business. The CEO did not want to tell anyone (including his wife!) he was selling the business. Of course, that is a recipe for disaster. We agreed to the assignment on the condition we meet with all of the family members to discuss the CEO’s plans. We understand the need for confidentiality but if you cannot trust your own family members, selling your business will not resolve your issues. The process of selling a business is difficult enough without keeping secrets from those you love…the people who will offer the most support to you throughout the process.
Business Broker/Investment Banker
At the risk of being self-serving, a business broker or investment banker who has experience working with companies of your size or in your industry will become the quarterback of your Deal Dream Team. Business brokers and investment bankers’ sole focus is helping their clients sell their businesses. These professionals will work with your M&A attorney, your CPA, your financial planner, and your family to ensure a successful process. Generally speaking, your business broker or investment banker will more than earn whatever fees you pay them either through a better/higher priced deal, a deal with lower tax impact, or both.
Trying to sell your business on your own may seem easy and less expensive, but if you want to ensure a successful outcome, act like an Olympian and go for the gold by assembling your own M&A Deal Dream Team.
