Planning Your Liquidity Event: Four Groups to Consult with Prior to Selling Your Business

Getting the advice of an expert is always good form, especially if you’re about to chart into unfamiliar territory. If your business or asset sale occurs concurrent with your retirement, there are a few people, groups and professionals you’ll most definitely have on your Rolodex. Such connections will help to maximize returns, legally avoid taxes and make your liquidity event as smooth a transition as possible.

Investment Banker

The size and scale of your company will help determine whether or not you retain a business broker or an investment banker. Whatever you choose, it’s well advised not to sell your business alone. Fees aside, your business will likely have a higher chance of selling and a greater chance of selling for more if you hire a professional to assist.

It may or may not seem obvious to retain an M&A advisory firm to assist in the business sales process. Here are some key reasons to look for when finding the right M&A firm:

  1. Network Connections. M&A firms know private equity groups, wealthy individuals (including wealth management companies) who can assist in bringing more buyers to the table
  2. Valuations. M&A professionals know how to value, prepare and optimize your business prior to getting it sold. In short, it’s easier to sell your business for a higher amount.
  3. Hands-off. Not only do broker-dealers able to extract more value from your business at the time of sale, they also make the process more hands off by preparing all of the requisite marketing materials and executing on the hundreds (and sometimes thousands) of phone calls required to get the business sold.


Lawyer or Attorney

Attorneys are an absolute necessity when it comes to completing quality deals. All the legal agreements pursuant to deal completion, including everything from the NDA to the purchase and sale agreement, need the trained eye of knowledgeable counsel. Attorneys can assist and consult in how to structure accounts and options so as to best prepare for the coming cash inflow. That is, they’ll help with estate planning by creating trusts, uni-trusts (including charitable remainder uni-trusts) and other tax advantaged accounts. Knowing the ins and outs of how to legally protect your funds after liquidating your assets into cash is extremely important.

Tax Professional

Sometimes it’s helpful to have the CPA and attorney in the room together. Both can offer insight into the tax ramifications selling your company. However, someone in the tax trenches may offer greater insight in the form of deductions and processes that can take place prior to the sale which can decrease tax liabilities. In fact, I personally advise clients regularly to speak with tax professionals on a regular basis, especially if the company you own is highly profitable.

There are regular tweaks and changes in structure that can be made in order to ensure wasteful tax is eliminated. Your tax consultant should help you avoid buy-sell agreement triggers  including estate tax issues, life insurance buyout options and the overall tax implications of buyout options.

CFP or Asset Manager

No liquidity event would be fully complete without bringing in an asset manager. Any true investment banker will know that financial planners and wealth management professionals in the area in which they work. Theirs is a complex web of connections. An asset manager will help to mitigate risk in your retirement portfolio while providing returns that coincide with the desired risk.

Selling one’s company can be the crowing achievement for many entrepreneurs who’ve spent their lives building successful businesses. Making smart moves prior to, during and after the liquidity event will help to save thousands in taxes and provide sustainable income for years to come.

Nate Nead on LinkedinNate Nead on Twitter
Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
  • R. Shawn McBride
    Posted at 21:20h, 18 October Reply

    As a lawyer I’d like to take the contrarian view on what you state.

    While you typically don’t want a lawyer leading the sale of your business, you do want a lawyer keeping an eye on things. Making sure that the terms make sense.

    There are a lot of details in investment documents, merger agreement and sale documents that could really trip a company/seller up.

    I know business brokers and others don’t like lawyers involved because they can complicate a deal, but they can also add a lot of value in protection. And, in some cases, they might have a client walk away if the terms are bad for the client.

    I’ve had business brokers get mad at me because a client didn’t do a deal. But in those cases we protected the client from a lot of risks that weren’t fully being disclosed. So I think the result for the client — not engaging in a transaction they didn’t understand or want — was best for the client.

    R. Shawn McBride

    • R. Shawn McBride
      Posted at 11:47h, 27 October Reply

      Thanks for updating the language on attorneys!

  • Sean Morris
    Posted at 21:48h, 19 October Reply

    I take the author’s point, but suggesting a business owner should not hire a lawyer because some “lawyers like to say they’re jacks of all trades,” is dangerous reasoning. It invites a business owner to think he’d be justified in not hiring *any* lawyer because *some* lawyers don’t know what they are doing when it comes to business transactions. Yes, it is true that a divorce, or criminal, or personal injury lawyer might not be helpful in a business deal — but by the same token, a business lawyer like me would not be helpful if you got pinched for a DUI.

    The better advice — which the writer ultimately gets around to — is to do your homework, talk with other business owners, and find someone who is experienced in business transactions — and especially in the type of transaction you are involved in.

    And, of course, you want a lawyer who’s a deal-maker. I’ll admit there are a lot of lawyers who try to justify their existence and end up screwing up deals because they don’t think like business people and maybe don’t understand the motivations of the parties themselves. But there are a lot of us (my colleague Mr. McBride included) who have the business acumen — and common sense — necessary to protect our clients, but do so without unnecessarily getting in the way of a good deal.

    Sean T. Morris
    The Morris Law Firm, LLC
    Bethesda, Maryland

    • R. Shawn McBride
      Posted at 11:47h, 27 October Reply

      I am glad to see they updated the portion on attorneys.

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