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Who Should be on Your Team of Advisors When Selling Your Business?

Jonah Pollone

Sellers Seller Articles Seller FAQ

Think of the sale of your business like the Superbowl. 

The stakes are high, and there’s only one shot to take home the coveted Superbowl ring. 

You can’t win alone, and the other side is well trained and ready to play - you need a solid team that has your back, and can keep you from getting sacked. 

At MidStreet, we help business owners successfully sell their companies every day. Some of the owners we work with have deal teams and some do not. 

In this article, we will explain what a deal team is and the professionals included in one. From there, you can decide if a deal team is the right fit for you and the future sale of your business. 

Along the way, the number of professional advisors on your deal team may begin to sound expensive - so we understand why you might be a little hesitant about the idea. 

Don’t be. The members of your deal team are here to save you money. Often, they save business owners hundreds of thousands of dollars. 

Let’s get started. 

What is a Deal Team in a Business Sale?

Deal Team of Attorney, M&A Advisor, CPA, and Wealth Advisor

A deal team is a team of professional advisors you assemble to help you sell your business. A deal team will usually include a: 

  1. M&A Attorney
  2. CPA
  3. Broker/ merger and acquisition (M&A) advisor
  4. Wealth manager 
  5. Tax strategist (optional) 

You may already have several members already selected for your team. If not, leverage a trusted advisor’s network to fill out your ranks.

NOTE

Members of your deal team will not always be your normal advisors. For example, your current Attorney may be a trusted advisor who is experienced in business formation and employment law, but they may not have experience in mergers & acquisitions.

One of the biggest benefits of choosing a well-connected broker to sell your business is that they will be able to provide suggestions on attorneys, wealth managers, tax strategists, and CPAs. 

MIDSTREET TIP

You should create your deal team ahead of time to prepare you for the process of selling and execute it when the time is right. By assembling your deal team 1-3 years before the sale of your business, you can increase profits, decrease taxation, and have a better chance of selling successfully.

If you cannot get referrals for advisors, you can also search for professional advisors online. Learn about other ways to prepare for your business sale by reading our blog “The Top 10 Ways to Prepare Your Business to Sell.”

The 4 Advisors on Your Deal Team

1. Attorney

Your transaction attorney will provide legal guidance throughout your sale. They will also: 

  • Draw up contracts and other legal documents (LOI, NDA, etc.)
  • Provide legal advice on the transaction  
  • Identify what you want and act on your behalf
  • Resolve current, ongoing, or pending litigation 
  • Identify legal issues that may hinder the sale (undocumented workers, patent issues, patent disputes, permitting laws, etc)

A good attorney will keep your goals in mind. If they become too preoccupied with extraneous legal tasks and not what you want from the sale, they can derail the whole deal. 

That is why it is important that you pick the correct attorney for your sale. If you pick an attorney with extensive transaction experience who knows what to expect and how to protect your interests, you will be set up for success. 

NOTE

Your attorney's pay structure can determine how motivated they are to get the deal done. If your attorney gets paid monthly instead of just receiving a lump sum at the end of the sale, they may not have as much urgency to get the deal completed.

If you already have an attorney that you trust, but they don’t have transaction experience, we still recommend hiring an experienced M&A attorney. You can still involve your trusted attorney in the deal, but using an M&A attorney removes a large learning curve they will have in the process and better protects your interests. 

We generally see the transaction attorney taking the lead on reviewing documents while keeping your attorney CC’d on all communications so they can also review.

2. CPA / Accountant 

The CPA/ accountant you use to sell your business may be your in-house accountant or an outsourced transaction accountant. In a business sale, an accountant will: 

  • Gather tax returns and financial statements for the valuation 
  • Help in the valuation process by producing financial documents and answering questions
  • Determine your tax implications once your valuation is complete
  • Speak to you and your broker about your tax/corporate structure (s-corp or c-corp)

The best way your CPA can help set you up for success is by keeping your financials up to date before your sale. That way, when your broker requests your financials for the valuation, the process will be quicker and smoother. Good financial books and records will also instill confidence in your buyer. 

Your CPA may also be included in conversations during due diligence to help clear up any questions that a buyer may have regarding your financials. 

Depending on your CPA’s experience, they may also be able to help you with the purchase price allocation in your business sale. Read our blog “What is Purchase Price Allocation in a Business Sale?” to learn what purchase price allocation is. 

3. Business Broker/ M&A Advisor

The business broker or merger and acquisition (M&A) advisor you choose to sell your business will help drive the whole deal. In the Superbowl example, they’re like your offensive coordinator - it’s their job to design the strategy, call the plays, coordinate with your other coaches, and keep the ball moving downfield. Specifically, your broker will: 

  • Perform the valuation of your business
  • Talk to you about your goals for the sale and after the sale
  • Create marketing materials (blind profile, CIM, marketing video
  • Vet buyers for your business
  • Conduct meetings between you and prospective buyers 
  • Facilitate competitive bidding among buyers 
  • Handle deal negotiations and assist in deal structuring
  • Coordinate your deal team
  • Manage the due diligence process all the way through to closing

A quality broker can make millions of dollars of difference to a deal. A good M&A advisor can also manage the sale of your business while you focus on running your business to keep it profitable. 

It is important to note that you don’t usually need an intermediary when selling your business to a family member or an employee. However, a broker can still be valuable in this scenario to properly structure the sale and guide you through the process. 

4. Wealth Advisor/ Financial Planner 

In the context of selling your business, a wealth advisor/ financial planner can help you determine how you invest the proceeds of your sale in accordance with your overall financial goals. In preparation for and during a sale, financial planners will help you:

  • Clarify your financial goals
  • Plan for retirement 
  • Manage liquidity events
  • Preserve your wealth 

Wealth advisors can also work with you to figure out how much you need from the sale of your business to fund your next endeavor - whether that be retiring or purchasing a new business. 

Many sellers have the misconception that you should wait until you have money from selling your business before speaking to a wealth advisor. It is actually quite the opposite. 

It is good to get started with a wealth advisor as early as possible - no point is too late, but the sooner the better. Getting in touch with a wealth advisor ahead of time will allow you to prepare for a “liquidity event” (i.e. a business sale). 

They will be able to help you allocate your funds after the sale of your business as well as help set up ways to delay or divert the taxes you owe. 

To pick the best financial planner for your needs, you should interview them to make sure they share a similar vision for how to maintain your wealth. Some wealth advisors will have more aggressive strategies, whereas others will be more conservative. 

5. Tax Strategist (optional)

Another advisor you may want to include in your deal team is a tax strategist. If you are looking for the best ways to shield your income after the sale, a tax strategist can provide options.

They may suggest ways to help you reduce or defer your taxable amount after the sale, including: 

  • An installment sale 
  • A 1400 Z opportunity zone
  • A 1031 exchange 
  • A 263c oil and gas program 

If your CPA does not have experience with purchase price allocation, a tax strategist can help you determine how to allocate your purchase price. 

Assemble Your Deal Team to Sell Your Business Successfully 

When you have a complete deal team, comprised of an attorney, CPA, M&A advisor, and wealth advisor, you will have guidance in the most critical areas of a business sale, and you will be able to stay focused on running your business.

If you want to use a deal team to sell your business, the next step is to learn the difference between a business broker and an M&A advisor. Read our blog “Business Broker vs. M&A Advisor - Which One is Right For You” to find out which intermediary is the right fit for your business. 

If you are looking for a merger and acquisition advisor to add to your deal team, call us today. We can help you find a great advisor to work with and walk you through assembling your deal team and selling your business successfully. 

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