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Blogs

Before you sell your business      (Part 2) 

Sid Queler

February 08, 2022

This two-part series presents considerations that will help business owners position themselves for success before, during, and after the sale of a business.

In part 1, readers learned about the importance of starting early and choosing the right structure for the sale. This post shares insights about personal financial and tax planning related to the sale of a business, preparing for what comes next and choosing the right experts.

Selling a business is not simple—or easy. However, there are things business owners can do to prepare for the sale, such as start early and select a beneficial sale structure. In addition to preparing the business for sale, owners should prepare themselves by:

Identifying wealth and estate planning opportunities. It’s all too easy to forget about personal financial planning when you’re engrossed in the sale of a business. Yet, the sale of a business often creates an enormous liquidity event. As a result, it’s vital for you, and any affected family members, to prepare for the wealth and tax implications of the sale before it happens. 

Prior planning may confer significant advantages. For instance, you may have an opportunity to:

  • Transfer the business to family members and/or trusts when the company’s market value is low.
  • Structure the sale and ownership of the business to achieve long-term wealth objectives and financial goals.
  • Thoroughly assess potential tax issues so that taxes can be minimized. 

Preparing for a shift in mindset. The sale of a business is a life-changing event. Many business owners have deep personal connections to their companies. They’ve invested significant parts of their lives in their companies. The daily routines, the risks, and the rewards that accompany running a successful business, are familiar and expected.

The move from business owner to wealth holder may involve significant changes in lifestyle and identity. Sometimes, a business owner will experience an unexpected sense of loss or other strong emotions before, during and after the sale.  

Being aware of these potential changes can make a difference. One way to smooth the transition is to define and focus on what comes next

Choosing the right team of experts. Having the right people on your team is essential. The people who want to buy your business may have purchased more than one company. They may have a team of experienced professionals who have helped them with previous purchases. They know what to expect and how to structure the sale to benefit the buyer.  

As a successful business owner, you’ve surrounded yourself with capable managers, employees and business professionals. You know the value of having a strong team. As the seller of a business, you want a strong team on your side. A group of experts who will:

  • Prioritize your best interests, as the owner
  • Understand and look out for the interest of your employees
  • Minimize business disruptions and internal conflicts
  • Minimize personal disruptions and conflicts

Your team may include several of the following experts:

  • Wealth management advisors
  • Attorneys
  • Business accountants 
  • Valuation experts
  • Insurance professionals
  • Banker and trust officers
  • Expert appraisers
  • Family psychologists
  • Family communications consultants

Preparation is the key to successful business sales. It’s imperative to start early, choose the right structure, identify wealth and estate planning opportunities, prepare for a shift in mindset, and gather the right team of experts. 

If you would like to talk with me about the sale of your business, please get in touch. You can contact me at Sid.Queler@cibc.com or 617.531.6954.

Sidney F. Queler is the chief growth officer of CIBC Private Wealth, US. In this role, he leads the firm’s business development team, setting strategies and practices that broaden relationships with individuals, families, foundations and endowments. Sid also serves as a member of the CIBC Private Wealth US Operating Committee and as a member of the advisory team for the firm's Boston office. In addition to leading national business development, he remains actively involved with client relationships.