Sheehan & Associates, P.L.C.

Planning strategies help ensure a successful company sale

Many Michigan business owners know that the ever-shifting economy -- currently on the upswing, it seems -- and high cash reserves are driving business mergers and acquisitions. Buyers and sellers have different views of a buyout, but certain actions may make the sale easier and more profitable for all involved, according to a recent piece on the subject.

When facing a possible sale, a company should look at all options available to it. Such things as the timing of the sale, tax issues and the financial needs and future input the company may want should all be taken into consideration. If possible, the use of a team that monitors the sale is often beneficial in preventing complications.

Buyers have questions and may be concerned about certain issues, so being able to address such concerns is necessary. Determining how much time will be needed to fully integrate the company and its customers into the overall acquisition strategy might be a concern. Buyers may want to know how much capital investment and improvements they will need to make to realize their goal.

Company valuation is a good way to see if the company is ready for a sale. Having the input of a financial adviser will help determine this. Responding effectively to buyers' concerns -- or anticipated concerns -- such as the company's viability and its ability to have a stable cash flow, a loyal customer base and a smooth transition of key personnel makes the company more attractive to potential buyers.

Dealing with the tax implications of a sale depends largely on whether one is the seller or buyer. A buyer typically wants an asset-driven deal while sellers like a stock deal. Considering all options ahead of time makes choosing the one that is right easier.

Astute business planning may be necessary when a sale is anticipated just as it is during ownership. Having an attorney's advice may help in structuring a sound plan for an acquisition or merger that suits the needs of the business owner, buyers and stockholders alike.

Source: Forbes, "Is It Time To Sell Your Business? 4 Strategies For A Successful Sale", Michael Evans, July 10, 2014

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