Unless you are a serial entrepreneur, you may only sell a business once. And when you do, it can be a very stressful time. To navigate these waters, it helps to surround yourself with people who have done this before. For that reason, the wise entrepreneur will begin assembling his transaction team well before a potential sale. That team will include the usual professional suspects (e.g., accountant and attorney) but may also include a few supporting characters who can play very useful roles. First among these supporting characters is an entrepreneurial mentor. If you have successfully brought your business to a point where someone might want to buy it, chances are pretty good that you’ve found a mentor or two along the way. This is not the time to abandon those relationships. Rather, the support of a friend who has sold a business (or several) in the past can be extremely helpful. This person can act as a sounding board for you as you evaluate potential deals and post-closing arrangements, and can be a valuable support when you believe that the business may not survive the attempt to sell it and the accompanying distraction of the sale process. Second, consider the benefit that can be found by bringing in your own personal financial advisor or estate planner. If this is your first sale, you may have a significant amount of your personal net worth tied up in the business. Selling the company can be a key to unlocking that value, but it is wise to have your personal house in order before you turn that key.
The last thing you want is to sell your business for a fantastic price only to find that because of the way you held the business (or your interest in it) you owe more tax on the transaction than might have been necessary. Getting your financial advisor involved early can help avoid this result. And of course you also don’t want to sell your business, obtaining a large amount of cash, and then find that you spend it too quickly. Your financial advisor can help you avoid this, as well. Not every business is identical, and consequently not every transaction faces the same particular challenges. But by being prepared early, assembling the right team, keeping up with the necessary maintenance and putting yourself in the position of a potential acquirer, you can anticipate the majority of the problems that may impede or change the value of your potential transaction. Of course, you may never wish to sell. In fact, you probably don’t. But just in case you ever do, consider these tips. And I’ll let you in on a little secret — doing these things will also help your business flourish regardless of whether you sell. Not a bad outcome.
Brian B. DeFoe is a business lawyer at Lane Powell, where he focuses his practice on helping companies in the customer-facing industries of hospitality and retail. Brian can be reached at email@example.com, via phone at (206) 223-7948, or on Twitter @BrianBDeFoe. Visit www. hoochlaw.com for more thoughts on spirits and the laws that govern them. This is intended to be a source of general information, not an opinion or legal advice on any specific situation, and does not create an attorneyclient relationship with our readers.
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