Smart Business Magazine, June 2019

66 Smart Business Cleveland June 2019 INSIGHTS LEGAL AFFAIRS Preparing for a sale What to consider ahead of the sale of a closely held business There is an emotional bridge business owners need to cross as they consider selling their company says Joshua G Berggrun an associate attorney at McCarthy Lebit Crystal Liffman Co LPA After decades of dedication to growing their business the decision to sell is difficult and should be taken seriously he says As they make that decision owners need to consider both their business and personal goals before the company is put on the market for sale Smart Business spoke with Berggrun about how owners should prepare their business and themselves for a sale What do business owners need to address as they prepare to sell their company Business owners must be ready to address tough questions Why are you selling What are your priorities Are you being realistic What do you need in order to put your business up for sale The answers to these questions may not be so simple and could take time to develop It is important for sellers to map out legal and tax implications triggered as a result of a sale or change in control and determine whether their goals are best achieved through an asset sale stock sale or a different transfer vehicle They should also decide whether it makes sense to carve out certain assets or liabilities from the deal What should a seller know about a buyers approach to buying a business A seller should figure out what motivates the buyer A seller should ask Why are they buying What value does my business add Does the buyer want to strike a deal Are they flexible and willing to compromise A seller should understand different types of buyers For example there are strategic buyers looking to acquire the sellers company and merge it into their portfolio of similar companies There are also individuals looking to buy a business because they are tired of working for someone else and want to be their own boss A business valuation may be the main selling point for one buyer whereas another buyer may also strongly consider the value and treatment of existing management and loyal team members What are the mistakes sellers make that most often lead to diminished sale value or difficulty finding a buyer When a major life event occurs a death divorce or loss of a key customer some business owners rush to put their business up for sale If sellers do not have their corporate records key contracts and financials together this inadequate planning and preparation leads to diminished sale value Smart sellers will also consider their industry and have their finger on the beat of market developments Technical innovations new products and channels of distribution and the regulatory environment can all impact the perceived value of the business Who should business owners turn to for help as they prepare to sell their business Buyers will want three to five years of financials so business owners must have their legal and financials buttoned up in order to bring their company to market for potential buyers and attract top dollar offers Having attorneys and accountants on your team can help accomplish that Owners will need to have a solid go to market strategy that targets the right buyers without letting the whole world know The right network is critical to this process and a trusted adviser such as an investment banker can help an owner tap networks of local national and international buyers Keep in mind that when selling a company the goal is to make the best deal for the owner his or her partners and key employees That means spending time and resources with a group of dedicated and creative professionals who are capable of acquiring and processing all of the information necessary to make informed decisions JOSHUA G BERGGRUN Associate McCarthy Lebit Crystal Liffman Co LPA 216 696 1422 jgb@ mccarthylebit com Insights Legal Affairs is brought to you by McCarthy Lebit Crystal Liffman Co LPA FOLLOW UP Connect with Joshua to learn more about selling a business Visit mccarthylebit com people joshua berggrun