Mostly privately held; usually with annual revenues of $10 million to $200 million.
We start by asking the question, “What will you do after the sale?” We need to get an idea for the needs and goals of a corporate seller before we start any advanced planning. After that, we move into planning the strategies and structures to minimize tax exposure while protecting assets from creditors. Then we move into the phase of making the necessary adjustments to the company itself to insure the highest possible sale price.
We recommend starting at least two years before a planned sale. For companies seeking to acquire other companies, the time can vary—what is most important is to take the time to investigate adequately all the issues surrounding your company’s target; those can include, accounting issues, litigation, environmental, real estate, human resources, debt and many other subjects.
Most closely-held companies have a lot of work to do. Common areas in need of improvement are accounting, where you will need audited financial statements, real estate, litigation, intellectual property, environmental problems, software licensing, and human resources to name some of the most important.
From the time you receive an offer, to the closing, we recommend you allow at least one year to complete the transaction.
You will need to verify the corporate structure and organization, accounting and financial statements, the status of pending or threatened litigation, real estate issues, environmental problems, corporate assets, including intellectual property, a full analysis of all company contracts and a review of any relevant government licenses.
Depending on your circumstances, you may need estate planners, wealth managers, business valuation specialists, accountants, corporate organization experts, human resource professionals and others.
The most important thing to do as a corporate seller is to take the time adequately to plan for the sale-this requires time, and a lot of it. In order to have time to do a good job, you should allow for two years.
Determining how to accomplish the purchase-the two most common methods are an asset purchase or a stock purchase. Both have their advantages, and will be the subject of much negotiation with the seller. Then you will need to thoroughly investigate the target company and all its contracts, systems and structures, as described above.