Those of you who know me may be surprised by the subject of this month’s newsletter. It’s not a point I make often, and I certainly don’t want my own taxes to go up, so it may come as a surprise that I am about to argue that there comes a time when paying more taxes is to your advantage.
If you’re still reading, let me provide some context. The vast majority of your time spent owning a company should be focused on growing both your business and your personal income, and the two are usually directly related. Therefore, finding ways to reduce your “on paper” business income by treating personal expenses as business expenses lowers your tax bill and helps accomplish this objective. To this end, most small business owners write off everything they possibly can; however, the final years before selling the business call for a change in strategy, because declaring as much income as possible can increase the price you receive in a sale. Let me explain. Continue reading
Some business owners face an unfortunate reality – external circumstances force them to sell their company before they otherwise would. Divorce, family emergencies, poor health, and financial instability all create the need for a quick exit or liquidation. The majority, however, get to choose their time. We’ve written extensively on the subject of timing the sale of a company, and we firmly believe that company and market factors outweigh personal factors when it comes to making this decision. That said, personal factors can’t be ignored.
Most business owners invest a substantial amount of time and money into their companies, to the point that they become an extension of themselves. To some, selling means giving up part of who they are. So, how do you know if you are ready?
You find yourself saying “If someone offered me __________________, I’d sell it to them tomorrow”. This is a telltale sign that you’re ready to sell, and now it’s all about negotiating the right number. If you find yourself saying this, it’s time to take the next step. At the very least, test the waters to determine how close you can get to your number. Continue reading
Who do you need on your side when you decide to sell your business? We created this chart that we hope will serve as a useful guide.
You: The first member of the team should be fairly obvious: it’s you. If you own the company, you need to play an integral role throughout the process. Sure, you hire experts because you care about the success of the deal and you don’t have the time or resources to commit to it. Just make sure you have the final word on all major decisions.
Accountant: Your accountant typically plays a small role in the process. They will supply financial documents to your broker, answer questions about how the tax returns are prepared, and provide advice on tax matters right before closing.
Attorney: Selling your company is a legal transaction, and it is imperative that you retain an attorney to advise you on all legal matters. At the very least, you need your attorney to review and negotiate the Letter of Intent and Purchase Agreement, two key documents in the sale. In more complicated transactions, the attorney’s role increases.
Broker: You hire a broker because you have neither the time nor the experience to properly execute the sale, and a good one will manage the process from start to finish. He or she will value the business and recommend a pricing strategy; prepare all of the necessary marketing materials; find a buyer; negotiate the key terms of the deal; and, assist all parties through due diligence to ensure a successful close. By shouldering the workload, the broker allows you to focus most of your time on continuing to run your business, making sure it doesn’t miss a step.
Last month, we received the honor of being named Post Acquisition Firm of the Year by UK publication Acquisition International. Today, as I’m working with a client whose deal we closed three months ago, I took the time to reflect on how our responsibilities as brokers don’t end on closing day.
After closing comes integration. Integration can involve converting IT and Accounting Systems to new platforms and implementing new HR policies and operating procedures. At the very least, new ownership has to set up new bank, bill payment, and trade accounts; file legal documents; and manage the organizational and cultural change that comes with a new owner. Even the best integration programs are cumbersome tasks that create headaches at all levels of an organization, and the worst make you question whether or not the deal was actually worth it. A Seller’s obligations vary based on the deal structure, whether or not they will remain employed, and the level of assistance requested by the Buyer. Regardless, rest assured that as a Seller you have a vested interest in helping out with the integration, if for nothing else than to make sure your employees – and your legacy – are cared for. Continue reading
August 10, 2012
For immediate release
Bridge Ventures assisted in the sale of a Texas audiology practice to the local subsidiary of a national retail chain. The transaction, which closed on Thursday, August 9, involved the spin-off of an orphan location by an independently owned, multi-office practice in the Dallas/Fort Worth market. The parties involved requested that their identities be withheld from public announcements.
Managing Director Craig Castelli led the deal for Bridge. Continue reading