This is part two of a three part series on how wealth managers can help you before, during and after the sale of a business. Read Part 1 here.
Making the sale: Building an effective team is key
Matching up with the right buyer and completing the sale can be an arduous, time-consuming journey with many hurdles that must be cleared along the way. And this is happening while you are trying to run the business in a way that enhances its market appeal.
Some key elements of the sale stage:
Put together your experts: Many business sales require a wide range of specialists. This group can include appraisers, investment bankers, lawyers and accountants. We recommend having a trusted financial adviser collaborate with these professionals to ensure your interests are well-protected.
Structure an acceptable deal: You may want to retain some equity or stay involved in the business under new ownership. Or maybe the buyer wants you to stay involved for a certain period, or wants a portion of the purchase price to be contingent on future performance. Your professional team can evaluate these different options and share what they have seen from other clients who have been in this position. You will then be in an informed position to decide what arrangements are the most (or least) desirable for you.
Get ready to let go: You’ve likely spent many years building the business up and much of your identity is tied to its rhythms, successes and challenges overcome along the way. For that reason, a sale is a major life event that will require mental preparation. Again, lean on your team of advisors who have perspective from seeing hundreds of clients go through this same transition.
Altair in Action
Protecting a Client’s Retained Assets
“An Altair client sold their company to a private-equity firm but kept the underlying real estate and leased it back to the business.
“Eventually, the PE firm struck a deal to sell the client’s former business. The deals terms, however, covered only the PE-owned assets, and not the multiple buildings that the business was leasing from our client.
“The leases in effect at the time had just two years left, so we stressed to the client that if they did not act before that deal closed, they could end up with unfavorable lease terms and even loss of the existing tenant, which could diminish the property’s value.
“On the client’s behalf, we succeeded in getting the PE firm to extend the leases into a long-term, fair-market structure prior to the close. This gave the client a number of potential options: sell the buildings to the business’s new owner, find a third-party buyer or just keep collecting the rent.
Key to getting this favorable outcome was that, even though a deal was already in progress, we got there in time to be able to protect our client’s financial interests.” – Michael Murray, Managing Director
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The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Although we made efforts to verify the accuracy of the information, Altair Advisers cannot guarantee its accuracy. Please see Altair Advisers’ Form ADV Part 2A and Form CRS at https://altairadvisers.com/disclosures/ for additional information about Altair Advisers’ business practices and conflicts identified.