Buying and Selling a Business

Our primary objective when selling/buying a business is to achieve each client’s long-term business and personal goals. Whether you want to acquire, merge with or sell a business you need to know its value. Many factors are involved in this determination, which need to be addressed in order for you to maximize your investment.

Selling Your Business

Selling a business is a complicated process that involves many difficult decisions. For most business owners, this once-in-a-lifetime event involves their biggest personal asset. A successful outcome requires accurate information and demands objective thinking.   We work to obtain the maximum market value to meet the client’s personal financial needs. The first step is to focus on what your company is really worth. It is important to have a current and accurate valuation completed on your business before you begin to market it.

Factors in your Income Statement to consider when valuating your business for its sale
  • Method of Accounting
  • Salaries to officers and related persons
  • Employee Benefits
  • Method of Inventory

An effective company profile is an important tool when you are trying to differentiate your business. Most potential buyers respond positively to a company who has a future plan and growth potential. A good offering memorandum will give credit to everything that contributes to your company’s success.

Elements to include in your Company Profile:
  • Products/Services sold
  • Company history
  • Statement of management’s reason for sale and future plans
  • Organizational Chart
  • Agreement by PartiesDiscounts (click)
  • Resumes of Management and key personnel
  • Market Share and competitor information
  • Overview of Labor Situation
  • List of Assets
  • Proposed price and terms (if data is to be disclosed)

Acquiring or Merging with a Business

Many issues are involved in buying a business. It is important to fully evaluate a business before you buy. You don’t want to buy a company that is more trouble than it is worth.

Finding an Acquisition Candidate --the following criteria can help decide your preferences
  • Below Average Performance because of Poor Management
  • Poor Performance because of Cyclical Economic Factors
  • Hidden Cash Balances
  • Market Niche or other Market Advantages
  • Synergy
  • Reinforcement
  • Price Comparisons

Due Diligence

A valuator can play a major role on the due diligence team that advises buyers in an acquisition. If you are buying a business you need insight into the target’s financial picture as well as access to knowledge of tax laws and accounting rules for business combinations. A valuator can also help you discover little-known land mines that can kill a deal, such as significant pension plan liabilities, hidden workers’ compensation cost and past tax problems.

Steps to take After Targeting a Business for Acquisition
  • Review the Target
  • Look Beyond Financial Statements
  • Review Projection

A valuator can provide an independent opinion that the company’s financial statements and disclosures are in order, discover unrecorded liabilities, and assess the reasonableness of projections. We will also help you structure a purchase agreement to maximize potential earnings while minimizing negative tax consequences.

Tax Due Dates