Mergers & Acquisitions

In general, you need to balance the tax implications to the buyer and the seller. The tax impact to the seller may vary greatly between the sale of a business’s assets versus the sale of a business’s shares. Therefore, understanding this dynamic upfront may improve the negotiation. 

There’s no one-size-fits-all approach to taxes when buying or selling a business. Our M&A advisors and tax team work together to walk you through your options. See some of the clients we’ve supported. 

Buying or selling a family business includes some unique complexities compared with other businesses. Along with navigating family dynamics, the deal might include negotiating employment contracts for family members who want to continue in the business or owners staying on as part of the board of directors. See success stories from some of the family businesses we’ve helped with finding the right buyer to continue their legacy. 

Due diligence is an investigation of a business being acquired to confirm all relevant facts, including a review of financial records and other key business information. The exact scope and process for conducting the review will look different depending on the buyer, but there are proactive steps you can take to expedite your responses to due diligence requests. Economic uncertainty breeds caution among potential buyers, making it more important for sellers to enter the market prepared for a review. For a successful sale, your business needs to stand out in competitive marketplace and have your corporate records in order. 

The time it takes to sell a business will vary depending on the situation, but a typical deal ranges from between six months to a year. Key stages of the process typically include: 

• Planning: You’ll need to understand what your business is worth and develop a strategy to determine the strengths and weaknesses of your business. This will help you get prepared for sale and ensure you can maintain “business as usual” during the process. 
• Taking the business to market: You’ll need to identify potential buyers and prepare an overview of your business to attract them. This document would include high-level details to generate interest with more specific details being shared once a potential buyer has been pre-qualified and signed a confidentiality agreement. 
• Negotiation: Careful negotiation is essential, as the terms you and the buyer agree to will affect the price you will receive for your business. Having an advisor on-hand to support you and coordinate with your legal, tax and accounting representatives will allow you to stay focused on making the deal 
• Closing: The sales process can be a fraught time for both the buyer and seller. The goal is for the closing stage to go smoothly, but without proper support there can be overlooked details that derail the expected outcome—experienced M&A professionals can share best practices to avoid pitfalls and help you get your deal across the finish line. 

Proactively planning for post-transaction integration is key to the future success of the operation. Don’t lose sight of the key elements of success that attracted you to the business. Start looking for synergies in cost categories, and preserve the policies, practices, and procedures that were key to the historical success of both entities before closing. Even with the right planning, the success of a combined entity is not guaranteed. The first 12 to 18 months post-close will test the buyer’s ability to execute on the deal’s value promise. 

The approach to maximizing value for shareholders is unique to each circumstance and it’s important to look at the deal as a whole when considering an offer. Both the structure of the deal and the adjustments negotiated as part of the sales process can have a significant impact on the final value that shareholders will extract. For instance, it’s tempting to take the highest offer, but some buyers may be willing to structure the deal more favorably in exchange for a lower selling price. This can actually end up netting shareholder more than if they had simply accepted the higher offer. The intricacies of negotiating a sale can make a big difference and it’s useful to have an advisor who understands how different trade-offs will end up balancing out. 

Requirements to support the transition period will depend on the specific situation. Some transactions don’t require the seller to stay on at all, but most require a transition period ranging on average from six months to two years. When planning your exit, you should consider how actively involved you are in the business, if your management team can work independently, the structure of your deal (if you retain an interest), and if the buyer is an investor or if they already do business in the industry and have existing management capacity to oversee the company.