Selling a business is difficult for many owners of privately held companies because the pool of qualified purchasers is considerably smaller than number of businesses available for sale. Baby boomers wanting to transition a company as a way of securing their retirement are competing with one another to make a sale, and the law of supply and demand is working against them.
The ongoing and integral role that CPAs share with their business clients allows them the opportunity to assist in many aspects critical to developing and growing as well as selling a company successfully. Ultimately, converting a business owner’s most valuable asset into cash to fund a retirement is of utmost importance.
Carefully planning for a business transition several years before entering into a sale agreement is pivotal to a successful conversion. Three preliminary areas of focus include:
- Determining likely acquirers (management, employees under an ESOP, family, or outside third-party purchasers
- Identifying whether independent third parties (if applicable) are competitors, strategists, investors, or individuals
- Determining how to enhance and prioritize the value drivers of the business to ensure profitability at the time of sale
These are the first steps in a list of many. CPAs are strategically positioned to guide business owners through the myriad of issues associated with securing profitable transitions. By playing an active roll in their clients’ business transition planning, CPAs are providing an invaluable service for years to come.