Build the Right Team for Your Transition: M&A Requires Specialists
By Trip Holmes
Selling your business will be the biggest transaction of your life, more important than launching your company or anything that happened in-between. Why? Because not only is your exit the culmination of all of your business decisions, it also sets the foundation for your financial well-being in retirement.
We’ve discussed many times with clients, prospects, and friends of the firm the concept of forming a team to guide your transaction to a closing, opening the door to the best new beginning you could ever imagine. Do you have the right team in place?
Whenever you’re looking to make strategic decisions, you need a team of specialists. My role as a Business Broker/M&A Consultant, for example, exists only to plan for and execute mergers, acquisitions and selling operating companies. You may think that makes me the ultimate specialist, and while I might like you to think that, it’s not true.
There are other key specialists you need to engage as well, and it may be a little uncomfortable for you at first. Virtually every middle-market family business owner I work with has a good corporate attorney. This individual is often the person who has helped them launch the company, form subsequent entities to hold real estate, reviewed leases, and drawn up contracts to manage everything from employees to vendor relationships. But do they also focus their practice on strategic transactions, like selling your business? If not, they are usually quite happy to put you in the hands of someone who does almost nothing but M&A work, and if not at their own firm, a trusted referral partner who may send them the day-to-day work in their focus area.
Furthermore, many corporate attorneys don’t handle estate planning for their executive clients. The sale of your business will have a huge impact on your estate and will require the attention of an attorney who focuses on estate planning. Estate attorneys ensure that your plan has the right vehicles for funding that optimize your return on investment (while collaborating with your financial advisor), as well as avoiding taxes whenever possible (while collaborating with your CPA).
The same holds true with the practice of accounting. My clients always have a CPA who has been doing their taxes for some length of time, and they count on this individual to help them see the tax implications of a whole host of decisions that they have to make on a daily basis. But any great tax accountant will tell you that you should also work with one of their colleagues on the consulting side when you’re planning and executing your transition. Much like their counterparts in legal, accounting consultants who focus on M&A will help you see the angles on tax decisions that only come around during strategic transactions and see them holistically.
What specific value do these specialists bring to the table? For my role, that of the broker, we can help you evaluate different approaches to a transaction that you often fail to see yourself. For example, I once worked with a company and helped them divest of a division, that they thought would have no value to suitors of their larger business. I was able to find them a buyer for that division prior to the sale of their company, to the tune of a seven-figure payout!
My counterparts in legal and accounting do equally impactful work for the clients we share. Lawyers who focus on M&A work are able to help clients uncover unseen value and risk through their due diligence efforts. They also work hand-in-hand with strategically-minded CPAs to create windfalls and avoid a ton of tax bricks falling on either the seller or his/her family post-transaction. Other accountants come in as business valuation specialists, ensuring you neither undersell your life’s work nor overprice it, chasing away buyers with perfectly reasonable offers that help you hit all of your goals.
And that last pieces is what it’s really about—hitting all of your goals. We talk a lot at Sabre Capital about helping you shape your legacy and control your destiny when it comes to your transition from business owner to retiree. We are proud to work with some of the sharpest minds in commercial banking, legal, finance, and accounting. The value these professionals bring to their work challenges us to bring the same level of excellence every day.
Contact us today to begin your transition journey.