So you are in the process of or planning on selling your business. You will need legal help on document preparation and tax advice on deal structure. What’s the big deal, right? You have been with the same CPA and used the same attorney for decades. They know you and look forward to helping you with the transition. Not so fast…
As a business broker, I have represented a number of business sellers over the years who have assigned an attractive sale structure to professionals who, if they get the deal done at all, will cause angst and run up unnecessarily large fees. Here are some real world examples:
- A seller’s lawyer kept insisting that the primary lender on the deal (a bank) change the subordination agreement language regarding the seller note. This, of course, never happens. The attorney delayed the deal one month over this issue, upset the buyer, and cost his client (the seller) nearly $20,000 of totally unnecessary legal fees.
- A seller’s lawyer kept missing target dates on getting the buyer’s attorney necessary deal documents (the attorney always had court dates), and the buyer got so upset with the many delays that he terminated his intended purchase.
- A CPA was asked for tax advice on his client’s pending business sale, and instead the CPA told his (now former) client that he was selling the business too cheaply. Dead deal. One year later, with a new CPA, the same seller sold his business to a different buyer for 80% of the price his CPA said one year earlier was inadequate.
You get the picture. Here is what you need to do in picking professionals to help with your sale. And this advice applies whether you are hiring new professionals or planning to use the same attorney and/or CPA you have had for years: ask him or her “what recent deal experience do you have?” Have the professional be specific, and then ask who you can call at these former deal clients to get references on your professionals with respect to how they handled deals in the past. If you are uncomfortable asking these questions (which you shouldn’t be) of your professionals, blame it on your “bad cop” business broker.
Asking those questions and checking out your professionals’ deal experience will (a) enhance the probability of getting the deal done; (b) shorten the deal’s timeline (nothing good happens when deals get dragged out); (c) minimize your professional fees; and (d) make your buyer happy with a smooth flowing, timely deal.
If you follow the above straight forward advice, at the end of the day you will be pleased and have more money in your pocket.
Contributed by Michael Greengard, Praxis Business Brokers.
Through the Michigan Chamber’s partnership with Praxis, we can guide you through a step-by-step process of the complexities, all while maintaining complete confidentiality. To learn more about valuing and/or selling your business, please contact Michael at firstname.lastname@example.org or 616-588-4640.