Expert Insights: Partner Christopher D. Fagan on Selling a Business
February 27, 2024
Watch our recent video interview as Partner and Transaction Advisory Services Practice Leader Christopher D. Fagan discusses the foundational work needed when selling your business.
Read the Transcript
[Christopher D. Fagan]
00:00:04
Business owners should do a certain amount of foundational work prior to going down the process of a sale.
00:00:10
First and foremost, business owners should focus on aligning themselves with the right advisors, accountants, attorneys, investment bankers.
00:00:19
Second, they should be focused on the structure of the deal, whether that is a stock deal or an asset deal, and the tax consequences related to that.
00:00:28
Financial due diligence helps you understand and present non-recurring or extraordinary costs that are embedded in the financial statements. It allows the seller to work on telling their story, understanding from the buyer’s perspective where there’s perceived areas of weakness in the business.
00:00:45
So before going down the process of selling a business, a business owner should evaluate what their end game is. For example, a business owner may contemplate selling a portion of their business, not all of it, but a portion because they need access to growth capital.
00:01:01
In doing that, that dictates the types of partners you choose when you’re evaluating potential buyers, but also how you structure the deal. You may want to retain control subsequent to selling the business.
00:01:15
In other scenarios, business owners, they want to sell a hundred percent of it. Those are entirely different lists of potential buyers that you’re choosing to partner with.
00:01:24
There may be a scenario where the business owner wants to sell the business to the employees through what’s called an ESOP transaction. There may be other scenarios where a private equity buyer is the right buyer for the business because they have a platform that is similar and they have experience in running that type of business.
00:01:44
But it all goes down to doing your diligence on the front end and ensuring that the partner that you choose to sell the business to has a vision and goals that align with what your goals are as well.
Disclaimer: This content is provided for informational purposes only and reflects information available as of the date of publication. It does not constitute legal, tax, accounting, or other professional advice. Please consult a qualified professional before taking action based on this content.
