III.
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Get Compiled or Reviewed financial statements. Most middle market companies are sold with reviewed or compiled (not audited) financial statements for the three prior year. If you are thinking of selling in the next few years, consider going the extra step and getting these done.
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Get ready for a six to 12-month sales process. The length of time to sell doesn’t seem to depend much on company size. It takes six months to sell if everything goes right. It rarely does, so nine to 12 months is a more realistic number to plan for.
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Get greedy. A year or two before a sale is the time to be greedy, for it is then that you can really impact value by focusing on controlling costs and boosting earnings.
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Clean up. A clean site makes a better impression on potential investors than a property that’s unkempt.
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Identify your dream team. You need an intermediary (probably), a transaction attorney, a good CPA and, hopefully, you’ll need a financial advisor to help you invest your now diversified portfolio.
Non-Tax Issues to be Resolved A.
Overview 1.
Price - The primary concern of both the Buyer and the Seller is generally the price.
2.
Form of the Deal - Stock Sale v. Asset Sale
3.
Form of the Consideration; and
4. Post-Closing Obligations - The parties should also be concerned with creating a “clean” deal, i.e., with as few post-closing entanglements as possible. B.
The Price 1.
The determination of the Price is seldom a scientific process in the mind of the
2.
A Buyer on the other hand tends to be more analytical in its approach.
Seller. 3. In determining the price remember in both Asset deal and a stock deal the price may be subject to adjustment at or close to the Closing Date (e.g., inventory on hand, accounts receivable, cash, level of liabilities assumed, etc.) 4. In determining the price both parties should consider closely the “after tax” purchase price. a. Seller should be schooled not look at the number as much as the “after tax” number; also the time value of money in a deferred payment transaction should also be considered, as well as the inherent risk in becoming the Buyer’s bank should also be considered. b.
Buyer is of course most concerned with the basis of assets acquired.
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