How to prepare yourself and your business for a sale

When owners are thinking about selling their business, sales price is often top of mind. But before a sale, there are many other factors to take into consideration, both professionally and personally.

“Often, little attention is paid to the family side of planning, but owners are going from having their assets predominantly nonliquid to being liquid on the day of closing” says Doug McCreery, CEO of CM Wealth Advisors. “Developing a relationship over time with a firm that can act as a quarterback to coordinate tax and estate planning, investments goals and other personal family concerns is an important step for a successful long-term outcome.”

Smart Business spoke with McCreery about steps entrepreneurs should take to get themselves and their families ready for the sale of their business.

Where should an owner start when preparing for a sale?

Start with your existing advisory team of accountants and lawyers, who can help you understand your personal balance sheet and determine significant family objectives. A multi-family office adviser should help model different levels of expenses, investments and short- and long-term financial and nonfinancial goals.

Ideally, you should have these conversations a year or more before you are ready to sell, because as you approach the sales process, time becomes very short as your focus compresses on what needs to be done before the sale happens.

An adviser can guide you through the planning process, spending time over several months or more, to work through your objectives for your family over multiple generations. This structured process ensures money is invested appropriately so your really important directives, such as college tuition, are covered.

In the higher-net-worth world, there must be an alignment of your investment objectives, looking at investments as long-term wealth preservation and creation for present and future generations. Your advisers can help you think about things you hadn’t thought about.

How else can an adviser help?

Relative to specific steps regarding the business, it may be appropriate to retitle ownership so that proceeds are payable to the next generation, most likely in trust. This requires careful tax planning, as well as practical planning.

The long-term asset transfer tax costs, looking at income, gift and estate tax components, should be considered when contemplating the sale of a business. Our role as financial advisers is to evaluate all of these aspects to recommend the solution that is most suitable, both from tax and family dynamic perspectives.

Why is it important to take family into consideration prior to a sale?

Often little attention is paid to the personal family side of planning for a liquidity event. Before a sale, owners should identify the long-term financial needs of themselves and their families and future expenses such as tuition payments, upgrading or expanding a residence, buying a vacation home, etc. The capital coming from a deal should be earmarked and reserved for those costs instead of investing it in a risky new venture.

Also consider what a liquidity event could mean for those around you. Even if you go to great lengths to keep a deal secret, once word leaks out, new friends and relatives will come out of the wall, asking you to invest in something they are working on. The other approach, which is often well intended, is charitable asks, creating a great deal of demand on both your time and money.

Establish a family investment policy statement that identifies and evaluates opportunities. Reflect on what you want your charitable objectives to be. Just dealing with requests is very time-consuming, so if you will have a significant amount of wealth, a multi-family advisory service is a good investment.●

INSIGHTS Wealth Advisory is brought to you by CM Wealth Advisors

Doug McCreery



For more information about preparing to sell your business,