We as entrepreneurs are typically mavericks, visionaries, leaders and self-motivated.  We have listened to our heart and passions more than our head before we decided to go out on our own.  People call us “risk takers” but I honestly I don’t think of myself as that.  For me, I think people working for others are risk takers, trusting someone else with their future and successes.  I want to be in control of my results, be held accountable to my decisions and look in the mirror to decide were my future is going to go.  To me, I’m not a risk taker, but to many others who need the comfort of not having to carry those burdens, they see me as one.  I live in a Navy town and see the SEAL team, Navy Special Forces, practice and train.  They build small units that make a team and then are very, very, very well trained to do specific missions.  They are often the first ones into battle with little or no outside support,

but for some reason they always come back.  How many SEALs did we lose in Iraq?  Not many and yet people think they take significant risks.    Not to me, I want to duplicate their success and decide who is on my team, who we play with, train really, really hard and then we go to battle.

I believe in the term “we” as I know that my success counts on what the other employees, supplies, vendors, lenders and advisers I chose to work with.  I understand that I am not skilled at every piece of my business and to be successful I need to have a team.  A team is like a chain and we are only as strong as our weakest link.  My success is a direct relationship between my skill set and those that I have surrounded myself with.  I look to surround myself with other successful business owners, employees more talented than I, advises with specific skill sets and customers that maximize my profit.  If this is your daily goal as a business owner, then don’t change the game when you decide to  sell it.

Any good exit plan starts and ends with a talented advisory team.  This team is often made up of a legal advisor, tax advisor, financial planning advisor and a broker.  There are additional subsets of each category, depending upon the complication of the deal, like business valuation experts, financing experts, commercial brokers, estate lawyers, etc.   Consider yourself as a football coach and every player has a role and position.  You never know when you need a punter, field goal kicker, special teams or a good offense and defense.  The key is to understand what each role does for you and when you need to call them in.

Let’s start with legal help, attorneys - every business owners favorite word.  Attorney’s used in the sale of your business can be transactional, employee, tax or business attorneys.  Each of them have a similar role but with a different expertise.  After working with numerous attorneys over the years I have determined that a role of an attorney is to protect you from all the things that could possibly go wrong.  It’s that simple, they are a conservative professional looking to protect you.   They review every document, every part of the contract and evaluate the risks associated with any document.   All good attorneys goals should be to help you collect the monies earned in the deal and protect you from future liabilities after the transaction is over.

A tax advisor, I recommend a CPA but I have worked with certified tax preparers, purpose on the team is to advise you about the tax consequences of the deal.  Taxes are complicated and different in every state.  A good tax advisor makes recommendations on how the agreement should be written to minimize your tax consequences and works well with the other advisors.  Finding a qualified CPA, who understands all the tax ramifications as well as options, is worth the money, trust me.  Pay them or the IRS, but you will be paying someone, it;s that simple.

A financial planner is different than an asset manager.  A certified financial planner, or CFP,  is someone who has been trained and is licensed in more than just investments and insurance.  A good CFP works with the CPA and they come up with the best way to maximize your take home pay through chartiable trusts, ESOP, defined benefit plans, executive compensation plans, etc.  A good planner understands your long term goals towards retirement and looks at not only the business sale but also all your other assets available.

Finally, a broker is someone that finds a buyer for your business and then assists you through the transaction.  Their job is to know business valuations, where the buyers are, assist you through the negotations and then advise you through the process.  There are generally two types of brokers and they fall into two sales categories.  Depending upon your state requirements the typical business broker is a licenced real estate broker who specializes in selling businesses.  They are similiar to your home broker who lists your business and gets paid, usually 10% by the seller, to find a buyer.  They usually represent businesses with revenue under $3-$5 million while investment bankers or merger and acquisition brokers take on the larger business transactions.  The main difference between the two is in the larger brokers usually include in the deal a “get the business ready for sale” approach in which they assist the business owner in preparing the business for sale long before it’s listed.  Most of these types of deals take a year or two to get ready to sell and the transactions are much larger.  Either way you go, they are both hired to find the highest qualified buyer for your business.

When it comes to putting together a team of advisors don’t think that they have to be full-time staff.  Attorney’s and CPA’s usually charge by the hour, financial planners make money once they get the assets under management or sell you insurance, so they are not an hourly fee, and the brokers charge a percentage of the sale price.  Look around and ask people you trust.  The lowest cost advisor is definitely not the way to go.  Find out about their history, how many transactions they have done and any specialties.  Many football games are lost by a field goal or special teams play so make sure everyone on your team has your goals in mind.

This entry was posted on Wednesday, October 28th, 2009 at 2:45 pm and is filed under Sell Your Business, Selling a Small Business, Professional Advice, Exit Stories, Emotional Selling, Exit and Answers, Buy a Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.