RESOURCES
Team
It is imperative that you partner with experienced professionals to help you through the selling process. The team should include the following:
Investment Bankers
A quality investment banker will perform a valuation of your company and help you decide on the best timing for your transaction, suggest marketing plans and help you prepare an in-depth investment memorandum to show to prospective buyers. In addition, they will help you define the most viable buyers for your business in context of your objectives.
Your investment banker should help in assembling the rest of the team. You should chose an investment banker who has been involved in several selling transactions. It is not critical that the investment banker is associated with a large or well-- known firm as much as it is important that he or she has the right background.
Review the background of your investment banker carefully--this is your most important decision to ensure the success of your selling your company for the best price. Do not be shy, get down to the details of prospective bankers backgrounds. The following is a list of the areas in which topics that your investment banker may need to have experience:
- Valuing private companies.
- Negotiating the terms of purchase agreements on behalf of buyers of private companies.
- Preparing financing memorandums for raising capital for private companies going through a change of control transaction.
- Negotiating supply agreements between the sellers and buyers in change of control transactions.
- Negotiating the terms of financing with sources of senior debt, subordinated debt and equity.
- Negotiating shareholder agreements among the equity investors and management equity participants in a change of control transaction.
- Negotiating employment agreements for senior management.
- Orchestrating the close of buyouts on behalf of buyers.
Accountants
You will also want to have the best financial advice. Your accountant, who may know about you as well as your business finances, should be in a good position to evaluate such a transaction from a tax perspective, and should be able to advise you on other financial implications of the sale of your business.
Accountants are best used to perform an audit (if one is needed), to help interpret financial statements or to provide advice in structuring the transaction to minimize tax consequences for the buyer and seller. In most cases the buyer will expect that an audit be performed as part of the due diligence process.
Attorneys
Probably the most frequently consulted advisor in the purchase or sale of a business is an attorney. Attorneys are asked to do everything from assessing the viability of a business and appraising its value to negotiating the purchase price and preparing the necessary documents. A good attorney advises and protects the client legally within the spirit of successfully concluding the transaction.
The attorney you select should be experienced in these matters, since laws changes and each business sale is unique. There are also specialized issues that must be addressed as they relate to your particular needs. Such matters as price, terms, consulting agreements, employment contracts and not-compete agreements will have to be negotiated and properly documented.
The primary function of an attorney is to prepare the purchase and sale documents as discussed by the parties. These documents should include reasonable and balanced protections for both parties. Reputation and experience in similar transactions are important criteria when selecting an attorney.
Valuation Experts
Business valuation experts can independently appraise a company's value. Bear in mind that they rely on the representations of the seller. They render a conditional opinion based on the assumption that the seller's financial statements are accurate and complete. They will attempt to independently verify only certain information.