Creating an exit strategy is something that should be done when a business is first started. Having a plan for how to exit the business in the future gives you a long-range goal to work toward as you meet the short-term goals of monthly sales and revenue.
Selling the business is often a good exit strategy for small business owners. If they’ve run a successful, healthy business over the years, they may have something worth selling.
Plan for the End
Selling the business may seem fairly straightforward, especially if the company has remained in the small-business category. But even the smallest business sale can get complicated if you’re not paying attention to details and don’t bring in the right consultants. This is where your accountant comes in.
The Role of the Accountant in a Business Sale
Here are a few ways your accountant can help out during a merger or acquisition situation.
Preliminary valuation. Before you enter into discussions with a potential buyer, you need to know what the business is worth. If you’ve been closely involved in the financial side of the business, you may already have a good guess. But your accountant can give you an objective valuation, helping you determine your material assets and liabilities so you can figure out what should be included in the sale.
Structuring the deal. There are many ways to structure a business sale. It may be a merger between similar partners or an acquisition of a smaller entity by a larger one. It may even include creating a new company. The business may be sold in its entirety, or you may only sell off the company’s assets, such as equipment and machinery, intellectual property, or customer database.
Many factors go into structuring such a deal, and your accountant can guide you as you work through them. Most accountants are adept at translating financial matters into terms that non-finance people can understand. Having your accountant on board throughout the process helps ensure that you’re not on the hook for something unexpected once the deal is done.
Tax expertise. Your accountant is an expert when it comes to tax preparation. But they’re probably also well-versed in figuring the tax implications from the sale of a business. The buyer will need a lot of financial data, and your accountant can help you pull together relevant documents. They can also calculate what the after-tax impacts will be once the sale is complete. How much will you pocket from the deal? And how much will you owe in taxes as a result? It’s good to know that up-front.
Plan for a new life. An accountant can also help you develop a vision of what life could be like after the sale. In conjunction with a trusted financial advisor, you can run scenarios on a new life or lifestyle. Will you retire? Will you start a new business? Maybe you’ll become an industry consultant. Your accountant can talk through some of the options with you and present the anticipated tax impacts of those options.
We Can Guide You Through the Process
At Adams Accounting Solutions, small businesses are our specialty. We’ve worked with numerous companies as they’ve gone through the M&A process, guiding them through the pitfalls and helping them over the hurdles. If your exit strategy involves selling the business, we’d love to talk with you. Give us a call at 913-888-9100 to schedule an appointment. We’ll help make sure you’re getting the best deal possible!
