How do you deal with employees, customers, and suppliers before and after the sale?

When it comes to navigating interactions with employees, customers, and suppliers, the approach hinges on fostering lasting relationships built on trust and transparency. Prior to any sale, it's crucial to prioritize active listening and understanding the needs and concerns of all parties involved. This entails open communication channels, where each stakeholder feels heard and valued. Post-sale, maintaining regular touchpoints and addressing any issues promptly ensures continued satisfaction and loyalty. Ultimately, the key lies in nurturing partnerships that extend beyond transactions, fostering a culture of collaboration and mutual success.

Determining the fair market value of your business is a crucial step in preparing it for sale. This helps set a realistic asking price and enables you to negotiate effectively with potential buyers. Several methods can be used to value a business, including comparisons with similar businesses, applying industry multiples, or calculating the net present value of future cash flows. It's wise to hire professionals to get an unbiased and credible opinion. A comprehensive valuation report can also be beneficial for tax and estate planning, securing financing, and attracting investors. Our experienced team of attorneys can help navigate the complexities of business transactions and ensure your interests are protected throughout the process.

Something that is always missing from a value standpoint, is tax due diligence. If you don't know your tax structure problems and/or potential risks then you do not know your true value. Multi-million dollar valuations mean little if you have multi-million dollar tax liability exposure, think personal liability from sales tax or withholding tax issues!

In every M/A deal in the small/middle market the first issues I see are in financial/tax compliance and overall legal compliance. Best to do an internal audit of your business before venturing into a potential sale. If your books are a mess the deal won't close. If you have not done tax liability due diligence, your deal will implode. If your internal and external contracts are a mess, or carry sloppy risks, your deal will sour. Key focus should be on bringing in an advisor that can see what skeletons there are, because you can be sure heavy buy side due diligence will find them.

In my experience, working with our clients, preparing accurate financial statements is a crucial step in selling a business. Buyers will want to verify the business's profitability and performance by reviewing at least three years of income statements, balance sheets, cash flow statements, and tax returns. It's essential to ensure that your accounting records are accurate, consistent, and up-to-date. If you have any outstanding debts, liabilities, or disputes, it's best to resolve them before listing your business for sale. An experienced team (like ours) should be consulted to help ensure that your business information (trade secrets, financials, and other interests) are protected, and to guide you through the process and transaction.

It's important to strike a balance between transparency and confidentiality, and timing is crucial. Waiting until you have a serious buyer or signed letter of intent can prevent anxiety-inducing rumors. However, it's also necessary to be honest with stakeholders about the benefits of the sale, while assuring them that their interests and relationships will be protected. This should be done before you go through agreement negotiations. At our firm, we have the expertise to help you develop a unique communication strategy tailored to your needs.

When it comes to negotiating with buyers, it's important to have a clear understanding of your business's worth and the value it brings to the table. Don't be afraid to set realistic expectations and prioritize your goals for the sale. Keep in mind that negotiations should involve a healthy balance of give and take, and it's important to stay flexible and open to compromise. Make sure you have all the necessary documentation and information at hand, and be prepared to discuss any concerns or potential issues that may arise. Working with experienced professionals, such as a business broker or attorney, can also help you navigate the negotiation process and secure a favorable deal.

Always be sure your external and internal agreements are ripe for a sale. If your vendor agreements do not allow for transfer of your solidified deals without "approval" you can be severally hampered by late stage renegotiation.

Consider how you will transfer the ownership, assets, and liabilities of your business to the buyer. Decide how you will deal with any post-sale obligations, such as warranties, indemnities, or taxes. You may want to offer training, support, or consulting to the buyer to help them run the business successfully. Also, consider your personal and professional goals after the sale. It's important to set realistic expectations and goals for your future, including your financial plans, investments, and retirement. You should seek guidance of a financial advisor and a tax lawyer to ensure that you minimize your tax liabilities and maximize your after-tax profits. Lastly, remember to stay organized and keep accurate (written) records of everything.

Also, do thorough due diligence on the intended purchase. Be sure to get trusted third-party input on the numbers, history, and the principals who own and/or control the business. It's easy to fall in love with an idea and to rush things through. But due diligence and homework will save you long-term headaches, provide leverage in negotiations, and keep you from making a bum deal.

In my experience, entrepreneurs often overlook the importance of building a solid team to support their business. It's essential to invest in talented and trustworthy individuals who share your vision and values. A strong team can help you navigate challenges, make informed decisions, and drive growth. Take the time to build relationships with your employees, communicate your expectations clearly, and provide ongoing training and support. By doing so, you can create a positive work culture and foster loyalty and dedication among your team members.