Selling Your Company: Post-sale considerations for sellers
Mergers and Acquisitions advice is often tailored towards the selling process or preparing your business for sale. Today’s blog shifts the focus onto what comes after the deal is done. Read today to learn the post-sale considerations that every seller should know.
Very often, business owners focus on the time periods before and during the sell-side process. What often gets overlooked by business owners selling their companies is what comes after the sale is completed. Common things that sellers need to consider are how involved they want to remain with their businesses, what other things they may want to focus on, or how to ensure that their business’ legacy is protected. The right M&A advisor can help a founder get what he wants from the transaction and negotiate post-sale terms that are favorable to founders.
Staying Involved in the business post-sale
One of the major decisions that any business owner must make is the degree of involvement with the business after the sale. Very often, buyers of a business will want the seller to remain for some period to ease the transition of the business to new ownership. Other times, a seller wishes to stay on with the business in either a consulting or shareholder capacity. Regardless, it is important to discuss and strategize with an advisor to ensure that you retain the level of involvement with the business that you desire.
Monetary Considerations post-sale
Another thing to consider post-closing is the monetary matters. Sellers are giving up their primary source of income, and it’s important for them to work with an advisor to ensure that they remain financially stable post-sale. There are several things to consider here:
Payout Structure: One of the main ways an advisor can get a seller ready for post-transaction life is ensuring that the right payout structure is in place. Is the money needed upfront or is it better to stretch it out over multiple installments? What tax considerations fit each type of structure? Answering questions like these help sellers meet their financial needs.
Equity: Retaining equity in the company potentially provides additional income post-sale. There are risks associated with this as transitions can affect the business’ earnings in some cases. An M&A Advisor can assist you with planning on how much, if any, equity to keep in the business.
Investment considerations: An advisor can also help you to plan potential future investments. This can include assisting you on the buy-side of a transaction, negotiating non-competes and their lengths, and ensuring that you are well prepared to roll your transaction into your next venture.
Life after business ownership
The final pillar of post-sale considerations is what a seller wants to focus on post-sale. Retirement, new business ventures, consulting on the business post-sale, every path has unique needs and considerations, and an M&A advisor can thread these goals into every aspect of the transaction. By finding the right buyer, negotiating the right terms, and closing the deal favorably, an advisor provides a seller with everything they need to focus on what comes next.
These are only a few of the ways that an M&A advisor helps sellers plan for the post-sale period. If you are interested in learning more about this, or selling your business. Email sseck@seckadvisor.com or use our contact form to get in touch.