“I'd like to sell my business — can you help?” It is a question on the minds of many baby-boomer owners. A legal advisor educates you on their role in the sell-side process, collaborates with your other advisors, and designs and drafts the documents needed for a successful transition — whether a transfer among family members, a merger, or acquisition, a transfer to management or a co-owner, or estate, stock-ownership and key-employee planning.
1. Establishing objectives — understand your goals, review existing legal documents related to your ownership, and refer you to the other advisors who will form your team
2. Determining business value and price — support a professional determination of business cash flow and value and your personal financial planning, and discuss methods of managing business value with your team
3. Protecting and growing your sweat equity — at a fiscal year-end planning meeting with your advisory team, implement value drivers across protection (entity status, trusts, ESOPs, non-compete and non-solicitation agreements, removing personal guarantees, asset-protection tools, multiple entities) and growth (incentive, nonqualified deferred-compensation, equity-based, stock-purchase, stock-bonus, stock-option and buyback plans)
4. Converting business value — for a third-party sale: tax analysis, due diligence, negotiation, and preparation of all transaction documents; for a transfer to insiders (children, key employees or co-owners): a written plan, purchase agreements, notes, security and employment instruments, key-employee incentives and a buy-sell agreement
5. Contingency planning — prepare buy-sell and key-employee retention agreements
6. Wealth preservation planning — align your estate plan with your exit goals, incorporate family business-transfer wishes, and consider holding companies, partnerships, trusts, related family-owned entities and charitable tax-planning techniques
Key facts: how a legal advisor helps
A legal advisor educates you, coordinates the advisory team and drafts transaction documents
Six areas: objectives, valuation, protecting and growing equity, converting value, contingency planning, wealth preservation
Protection tools: trusts, ESOPs, non-competes, asset protection, removing personal guarantees
Whether you sell to a third party or to insiders, counsel handles tax, due diligence and documents
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax or financial advice. Consult qualified advisors regarding your specific circumstances.
