Thinking about selling your business?

With the day-to-day demands of running a business, personal financial planning can easily take a back seat. Yet the sale of a business is often a major liquidity event that can significantly reshape your financial future. The good news is that a little early planning can go a long way. Before you make your exit, here are three important things to think about:

1) Position your business to show its full value

Whether you are actively planning to sell or receive an unexpected offer, it helps to have your business in the best shape possible. The more organized and well-run the business, the better positioned you may be when it is time to negotiate. A few smart places to start:

• Clean up all financial statements.
• Make sure all contracts and agreements are current, including HR-related documents.
• Review and strengthen your governance policies and procedures.

TAKEAWAY: Even small details can have a surprisingly big impact on valuation. Before selling, make sure your documents, records, and processes are accurate and up to date.  

2) Do not overlook the personal wealth planning side

Selling a business isn’t just a business transaction. It is also a personal financial turning point. Planning early can create opportunities for wealth transfer and help you think more clearly about what comes next for you and your family. To position yourself and your family for sudden wealth, consider the following:

• Transfer the business to family members and/or trusts when the market value is relatively low.
• Structure the business ownership, and ultimately the sale, around long-term wealth needs and goals.
• Keep future tax issues in mind.

TAKEAWAY: It is easy to focus so much on getting the deal done that you forget the bigger picture. When planning a business sale, make your financial goals a priority.

3) Build the right team of advisors

Selling and transitioning your business can be complex and sensitive, so it is important to have the right team with you on the journey. A strong group of advisors can help reduce disruption and make sure your interests stay protected throughout the process. Depending on your needs, that team might include:

• A wealth management advisor
• An accountant, an estate planning attorney and a corporate attorney
• An insurance professional
• A banker and a trust officer
• An expert appraiser, a family communications consultant, and, in some cases, a family psychologist

TAKEAWAY: A good team of experts can help you navigate the process more smoothly and often leads to better outcomes.

Selling a business comes with plenty of challenges, but it also creates an opportunity. The more time you give yourself to prepare, the better your chances of making the transition as smooth and successful as possible. Whether you are thinking about selling in one year or ten, it is never too early to start positioning yourself and your business for long-term success. For more information about selling your business, reach out to your CIBC advisor.