For owners of privately-held companies, the decision to sell their  business is often the culmination of decades of hard work and may be  one of the most important personal and financial events of a lifetime.  While there are alternatives to an outright sale (recapitalization,  accommodating an owner’s desire to maintain a financial interest,  or the hybrid exit strategy of a sale involving an Employee Stock  Ownership Plan), setting clear objectives tends to produce better  outcomes. Knowing when to sell and what tax effects it will have  often help crystalize those objectives.

In preparing the company, owners should conduct a thorough  examination of their corporate operations that will illuminate the  areas closely examined by any prospective buyer: financial forecasts  and business plans, key contracts, intellectual property, customer  lists or any unusual or contingent liabilities. Hiring an advisory team  experienced in the sale of businesses will help the owner to set  reasonable expectations, guide during the search through possible  strategic buyers, financial buyers or a management buyout. The team  can also lend insight into how the business should be marketed as this  will be highly situational and its course should be carefully plotted.

While progressing through the course of the sale, an owner can be  involved in Non-Disclosure Agreements, Letters of Intent, Definitive  Agreements and Indemnity obligations, or other agreements  depending upon the structure of the sale. The closing conditions and  termination of rights should be carefully thought out and specifically  defined in these agreements. Post-closing, the sale of a privatelyowned business often represents the end of one chapter and the  beginning of another. The quality of the new chapter can depend  significantly upon whether thoughtful preparation was undertaken  well before the sale process began.