Selling a business takes time and thoughtful preparation regardless of whether the objective is an owner wanting to be in a position to maximize the sale price and terms of the sale, finding a strategic buyer to help take the company to another level, or transitioning ownership of the family-owned company to the next generation.

Likewise, a corporate acquisition has its own methodology for increasing the likelihood of a successful purchase and managing the risks inherent in the process.

Depending on the nature of the transaction, there are various ways to approach the sale or purchase of a business which can significantly reduce costs and the time required to close a deal.

Over the past 25 years, we have been involved in and closed numerous sales and purchase transactions involving large private equity investors, including both U.S. and European public companies, large technology companies, and sales and purchases of small and medium-sized businesses involving parties from Canada, the United States, Taiwan, Hong Kong, China, Switzerland, and the Caribbean.

Sophisticated business owners know the sale process starts long before putting a business into play. There are tax considerations involved which may make a sale more efficient from a seller’s perspective, other business considerations relating to how ownership of a business is structured, getting buy-in from key stakeholders to the proposed transition, employee retention, and consideration of matters relating to the day after a deal is completed.

Ideally, tax and commercial considerations align harmoniously. In reality, this is not always the case. The structure of a company when it was first set up may not be the best structure when preparing for a sale. Each situation is of course different, but tax considerations should yield to commercial efficiencies, especially on setting up a structure conducive to a sale of the business. Put plainly, some structures make sense from a tax perspective but not from an exit perspective, and will only serve to hinder a deal and make it much more costly to complete. This is one of the prime reasons to start the process for planning a sale well before embarking on the task of actually trying to sell it.

Other factors to consider include, assembling a team which at a minimum would include your accountant and perhaps, a chartered valuator; who the ideal buyer might be, which may reflect on the valuation price for the sale; keeping your banker informed; reviewing and organizing all material agreements your company is party to so that once the deal is in motion, the buyer’s due diligence review can get started (it is worth noting that some sophisticated buyers will allocate over 150 individuals to the due diligence review process to learn everything about a potential target acquisition). Keeping a physical plant as well as intangible assets (including especially, related documentation) properly maintained, current, and up-to-date is easier than doing patchwork repairs or rectification in the middle of a due diligence review.

If the business sale involves transitioning a family-owned business to the next generation, an additional set of considerations will be involved over and above merely financial ones. There tends to be some delicacy involved in these matters, and statistics indicate that the vast majority of family-owned businesses do not survive a transition to the first generation, and even less to the second one. Again, there is a methodology to these types of transactions which, if followed, increases the likelihood of a successful outcome. These types of transactions tend to take considerably longer than a sale of a business to an arms-length third party, and will also typically involve estate planning.

We tend to act as the hub of the wheel on these transactions, leading the negotiations, and ensuring that information is circulated in a timely manner between our client, our client’s accountant, the buyer’s counsel, the buyer’s accountants, and other advisors engaged by the parties.