Recent studies reveal that as many as 25% of business owners are contemplating an M&A transaction in the next 36 months – how should you advise them?
Why help them – I’m going to lose a client? That is a foolish attitude. The key is to be a value added adviser.
How does a professional position themselves as value-added advisor – not only interested in the bottom line- help strengthen your relationship with them – enhance your reputation as their trusted advisor. You have to provide broad advice even if the work won’t ultimately benefit the adviser.
Estate and Tax Planning – The value in the sale is really what your client will achieve after taxes. There is a lot of planning and time needed to maximize value. For example - One client had decided early on that he would donate 10% of the proceeds to charity – but did not set up a charitable trust to protect these proceeds from taxes, e.g. a charitable bail out.
Upgrade Financials – set up to minimize taxes - often do not give true picture of a company’s true earnings capacity. Improve financial reporting systems, consider audited or at lease reviewed financial statements.
Legal – IP Protection.
Key employees non solicitation/non-compete agreements.
Contracts/Leases transferable in the event of a change in ownership.
Deal Killers – issues must be dealt with or they will ruin the deal.
a. Environmental – Phase I – begin cleanup – get cost estimates. Do an investigation to corroborate business is clean and if not deal with it.
b. Litigation – settle when possible
Ecommerce – lots of change.
a. privacy protection policies
b. Cyber insurance – need insurance to make sure they are protected confidential information.
c. Sales Tax/Nexus Issues of Wayfair case. Are there sales tax issues? If so address them before selling the company.
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