If you want the sale of your business to proceed as smoothly and efficiently as possible, bring in the right professionals to help you through the process. An experienced business broker can help you attract the ideal buyer and carefully assembled team of professionals can keep the process moving quickly and minimize bumps in the road. Being well prepared for your transaction and choosing the right third parties can help you make this deal as profitable for you as possible.
In Part 1, we discussed several methods a buyer can use to fund a business acquisition. Because bank funding is often the best option, we further discussed how to choose the best banks for acquisitions.
The necessity of funding is clear, but other third-party services are critical to an easy and painless transaction. In this article, we will discuss two other important categories of third-party services, attorneys and valuation experts. When having these third-party professionals on your side, it is even more vital to choose the right one for the job. This is another area where a transaction advisor or business broker expertise and relationships can help you.
Third Party Services: Attorneys — What Do You Need?
Attorneys are necessary for any major transaction like a business sale. But what area of law should these attorneys specialize in? There are two types of attorneys that you will likely need assistance from during your business sale, transaction attorneys and tax attorneys.
Transaction attorneys, also referred to as mergers and acquisitions attorneys, prepare and guide you through the execution of all contracts, agreements, and other documents necessary to completing your business transaction. An attorney who specializes in business transactions will be intimately familiar with the potential pitfalls in these kinds of contracts and will be able to ensure your agreements cover all foreseeable complications. They will fully understand the steps in the process, from the purchase agreement to financing to diligence review. They will ensure that any important ancillary agreements are included, and that you are protected from all angles.
Although you know your business inside and out, it can be difficult to imagine every way in which your business’s current legal agreements will impact and be impacted by an acquisition. A good transaction attorney will help you cover all those bases. They will review all aspects of your business and ensure they are properly transferred, including leases, employment contracts, franchise agreements, vendor contracts, and intellectual property rights.
Tax attorneys are highly specialized attorneys who are experts in the policies of tax liability. In the context of a business sale or acquisition, tax attorneys are invaluable. Understanding the tax ramification of selling your business can be daunting. It takes an expert to ensure that your deal is properly structured to minimize that burden.
You may be wondering, why not simply use your current CPA? Most CPAs specialize in income tax, not the tax complexities involved in the sale of a business. For that, you want the best possible advice, so if your CPA does not have structuring and transaction experience you should consider a tax attorney. We just closed a deal that almost fell apart because our client’s CPA asserted that 70% of the deal proceeds would be taxed at closing. We connected our client with a tax attorney who was able to reduce the tax burden to less than 10%.
The advantages that a tax attorney can bring you are numerous. In some cases, it may be possible to severely reduce your taxes under the federal code. Or you may be able to delay taxation and put that money to good use in the meantime. Understanding and utilizing your best options is going to require having an experienced tax professional on your side.
Third Party Services: Attorneys — How to Choose the Right Ones?
You may be tempted to go with the attorney you’ve worked with for years, and this desire is understandable. Feeling comfortable with your attorney is important. However, in a major transaction like this, it is crucial to find the right person for the job.
When selling your business, it is not advisable to use trial attorneys who also handle criminal, civil, or family law litigation. Business sales are time sensitive, and you need an attorney who can focus on you. A litigation attorney may get caught up in a trial during the course of your transaction, and their attention will be divided or consumed by that trial.
Also, an attorney who does not specialize in business transaction is likely to end up costing you considerably more. They will need time to get up to speed on the intricacies of these kinds of deals, and in the legal world, time is money.
How IBEX Can Help You Choose the Best of the Best
At International Business Exchange, we understand there’s nothing more important than finding the right person for the job. That’s why we have spent years developing relationships with attorneys, bankers and other professionals. We have done all the leg work, so you don’t have to.
We regularly attend major conferences, and are continually meeting new third party service providers. We spend time with the people we meet. We keep in touch with them and talk regularly about legal and industry changes. We get to know them personally, so we can be confident in trusting our clients to them.
Our trusted transaction attorneys can help you get the deal done right at the minimum cost. And we have seen clients just like you save hundreds of thousands of dollars in tax liability through assistance from a good tax professional. We have seen a plastics company save $800K, an injection molding company save $500K, and a cabinet maker save $300K, just to name a few.
With our experience working with these professionals, we help ensure that your deal goes through as smoothly and profitably as possible.
Contact the expert advisors at IBEX to learn more about important third-party services for your deal.
Seasoned professional, Mike Miller has spent 25 years as a major executive with two Fortune 500 Companies - Armco Steel, Cooper Industries & British multinational conglomerate BTR. He was responsible for global operations. He has owned and operated over 150 business transactions both on the sell-side and buy-side, knowing the in's and out's involved with closing. Mike has been Officer in many professional organizations including past President of the Texas Association of Business Brokers.
"Texas Real Estate Commission Information About Brokerage Service",
"Texas Real Estate Commission Consumer Protection Notice."