Selling your business is more complex than selling anything else. It’s requires a tremendous amount of planning and information gathering.
One of the major mistakes business owners make is failing to plan far enough in advance to ensure they’re maximizing the proceeds of the sale.
It’s not how much proceeds you get from the sale that matters most, but how much you get to keep. You can’t just decide to put your business on the market and expect to maximize your after-tax proceeds.
Optimal Corporate Structure
One of the most important planning steps is making sure your corporate structure is set up to minimize the taxes you will have to pay upon sale. With an ineffective structure, you’re just leaving money on the table. There are various ways to reorganize your company and it takes a high level of tax expertise to set up the right corporate structure to meet your objectives.
Asset Sale Vs. Share Sale
When you’re selling your business, it’s important to ensure that the transaction is structured in a way that is fair to you and minimizes your taxes.
There are two types of sales: asset sales or share sales. Buyers generally prefer an asset sale because it minimizes their exposure to liabilities, but sellers generally prefer share sales to access their lifetime capital gains exemption, and also to avoid any future business obligations.
Building Business Value With CoreValue® Consulting
Minimizing your taxes is only one part of the equation. Perhaps even more important is maximizing the value of your business well in advance of the contemplated sale. You deserve to get full value for all the years of hard work you’ve put into your business, and we can help you do just that with our Unleashed management consulting services.
The CoreValue® system, developed at MIT, has been used to help over 3,3OO companies generate over $4.2 billion in increased value. It is accepted by the National Association Of Certified Valuation Analysts (NACVA), and has been proven to produce excellent results and get you to the next level, quickly and affordably.
Among other benefits, the CoreValue® system:
- Analyzes 18 critical business value drivers, including operations, sales/marketing, brand, senior management, and recurring revenue, to reveal strengths or weaknesses and quantify the ability of the drivers to work together to achieve revenue and profit growth and higher business value
- Determines how well your business is performing compared to its industry peers
- Identifies serious risks to your company’s value and provides solutions to eliminate those risks
- Uncovers hidden conditions that can derail your plans for the future
- Provides dynamic, actionable steps to guide you through value-building activities
- Builds best practices into your company’s operations
Long-Term Planning for the Sale of Your Business is Essential
If you’re planning to sell your business, it’s best to start planning several years in advance to maximize your revenues, profits, and business value, and to maximize the cash you get to keep when the business is sold.