Transition Planning – Option 1 Selling Your Business
When it comes to selling your business, there are more issues to address than most people think. Here are a few key items that impact an exit strategy:
- Understanding the value. Value is unique to each company, dependent on your performance, economic conditions, competition, etc. You need a valuation conducted to understand a realistic outcome.
- Underestimating the time to prepare for exit. It can take years to get a company ready to sell and possibly years to sell it. There is often work needed to strengthen financials.
- Eliminating recasting. Recasting is telling the potential buyer that the business would be more profitable without these expenses you are carrying. This includes family who might be getting paid but are not involved in the company, excess cars, trips, equipment that is not really needed, etc. Some owners get comfortable expensing items to reduce income but when you go to sell, you need at least two years of “clean” financials. You might need audited financial statements as well.
- Lack of non-competes and/or lack of management that can sustain the business after you leave. A buyer is buying an asset that they think will make them money. Eliminate the thought that exiting employees would never walk off with customers or intellectual property by having proper written agreements in place.
There is a wave coming. The average Baby Boomer is 65 years old and owns 60% of the businesses in the U.S. The laws of supply and demand will come into play. If there are too many sellers and the buyer pool remains steady or shrinks, values will fall and many businesses may not be saleable. Please contact us for more information.
Bronswick Benjamin is a mid-size, solutions focused CPA firm located in the Chicagoland area. We support privately held businesses using a unique Business Evolution approach that helps clients navigate through their life cycle. The firm provides customized accounting services, tax planning and compliance, audit/assurance services, tax strategies for domestic and international clients, and leverages information to provide best in class business advisory services. For additional information, please visit www.bronswick.com or call 847.808.9800.