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- Choosing Your Advisors - Part 2By Tricia Radison of Business Transitions Inc. When it comes to selling your business, choosing the wrong advisors can be disastrous. A qualified Business Sale Advisor can provide invaluable assistance and may get you more for your business than you could have on your own, but remember to choose wisely when selecting whom to work with. Whether you choose to hire an intermediary or sell by yourself, you’ll need to use the right lawyer and tax expert, and to consider other advisors as well. Lawyers - Having a lawyer in your advisory team should be considered mandatory. In residential or commercial property transactions, a standard purchase and sale agreement is often used. However, the agreement for the sale of a business is a much more complex document. While it may be tempting to use an agreement prepared by a real estate agent or even a stock agreement obtained from a book or the Internet, don’t go this route. You may save lawyer’s fees, but you’re also putting yourself in a dangerous position. Purchase Agreements are written in legalese, where words and phrases mean very specific things. Misunderstandings can occur with dire consequences. Additionally, these contracts can contain a wide variety of clauses, conditions, representations and warranties. Are you really going to sift carefully through each one presented by the purchaser in order to figure out what it actually means to you now and in the future? There are many ways to legally structure your deal and you want to use the one that will best protect you. The buyer, on the other hand, will want the deal that best protects him. The buyer’s lawyer normally prepares the agreement to protect the buyer and it’s your lawyer’s job to look after your interest. As you can see, it’s important to find a lawyer who knows what she’s doing. This could be your lawyer, if she practices business law and is familiar with leases, Purchase Agreements and everything else involved in a business sale. If business law isn’t one of your lawyer’s areas of specialization, don’t hesitate to get someone else who is able to provide you with educated advice. Your lawyer will understand and you’ll end up with a deal structured to protect you as much as possible. Tax Experts - Asset sale? Share sale? How will the tax implications of each affect the amount in your pocket on closing day? The way you structure the sale of your business affects the tax you pay and could potentially mean the difference between retirement and having to go back to work! You may also discover that structuring the sale differently saves you so much in tax you can reduce your asking price, making the business even more attractive. Relying on poor tax advice from accountants who are not familiar with the tax issues involved in selling a business is one of the most expensive mistakes sellers make. It can cost you thousands. Since your own accountant is already familiar with your situation, start by questioning her. Find out if she’s done this type of work with others and how comfortable she feels making recommendations regarding your tax situation. Then get a second opinion, either from your business sale advisor, another accountant, or through your own research. There’s no need to feel like you’re insulting your accountant. This is your business! The Selling Package - On any given day, there are a lot of businesses for sale. How are you going to get buyers to notice yours? How are you going to get people to want to buy yours? Having a good business with growing profits isn’t enough in a nation where, according to a survey done by CIBC, over half a million small and medium-sized businesses are going to change hands in the next five years. Many of those businesses have financial pictures as good as or better than yours. If you’re going to sell on your own, or are stuck in a listing with a broker who isn’t strong at presentation, it is worth your while to hire assistance in creating your Selling Package. Copywriters - If you haven’t been complimented on your writing in the past and I’m not referring to your excellent penmanship - use a professional writer who understands how to keep readers excited. Spelling and grammar errors are always a bad idea, but the real reason to hire a professional to at least edit your work is to generate some fire. Words matter. They have a major effect on the price, don’t treat them lightly. Freelance writers have expertise in different areas. Make sure you ask for samples of marketing copy so you know the writer can make your Selling Package really “sell”. The copywriter will probably be able to provide assistance in writing compelling ads with standout headlines too. If not, find an advertising expert willing to help. Graphic Designers - The first impression a prospective buyer receives of your business will be lasting, so it’s imperative to make an impression of quality and professionalism right from the beginning. Having your Selling Package designed by a professional graphic designer and printed on the best quality paper you can afford says volumes about you and your business. I also recommend going the extra step of having an introductory sales letter and Confidentiality Agreement designed with the same feel as the actual Selling Memorandum. This doesn’t cost much and looks very impressive. Clear communication is important between you, or your business sale advisor, and the designer in order to create the right visual imagery for your business. It may take a few tries; make sure there is room for creative changes in the designer’s fees before you begin. The bottom line is that the quality of your advisors will affect the cash in your pocket at the end of the sale. Choose well! Considering selling? Tricia Radison of Business Transitions Inc. can give you the information you need to make the decision. tricia@businesstransitions.ca or 403.255.4442 |