Selling Your Business? 4 Ways Your CPA’s Help Is Indispensable
We often have business owners come to us ready to sell their business and with a distorted picture of the value and condition of their business. With the help of a CPA, misconceptions can be corrected, and a plan of action can be implemented.
If you have decided to sell your business, you may already have a price in mind, but you will need your accounting team to help with a realistic preliminary valuation.
With an objective valuation established, your financial advisor can help determine your assets and liabilities and what will be included in the sale.
Your accountant will also organize financial records to illustrate the business’s income over time, as well as: past earnings, cash flow, balance sheets, equity statements, and the company’s performance in relation to the current economy.
Structure the Deal
The responsibility of your financial advisor is to determine which deal structure will result in the highest asking price with the least complications.
The sale of your business could be a merger, an acquisition, or the formation of a new company. For the sale, you could be selling company assets or majority stock ownership, equity, or a combination of assets and ownership.
Your accounting partner acts as a translator, describes the pros and cons of your options, helps you to understand the consequences of various decisions, and works to maximize the negotiations in your favor.
The tax implications are a significant factor when selling a business, and there can be tax implications at the local, state, and national level to consider.
Your accounting partner will audit, verify, and provide documentation your business’s tax filings to substantiate your tax status for use during negotiations.
The buyer will attempt to negotiate the purchase price, and your accountants will consider the effect of those negotiations on tax consequences. One of your financial advisor’s roles is to help keep the deal moving forward and to safeguard your interests.
Due Diligence to Evaluate Risk
Besides negotiations, most of the time spent during a potential sale is spent in due diligence. Your financial advisor will spend time on a thorough internal investigation of your business records to assess and estimate values to risks found.
Your financial team provides evidence for decision making, rather than you relying on guess work and emotions for those decisions.
When You Are Ready to Sell Your Business
When you have made the decision and are ready to sell your business, Griffin & Furman is your financial advisor. Give us a call.