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Opportunity knocks. Ready to open the door to sell your business? » CBIA

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The COVID-19 pandemic has hit many businesses, including manufacturers.

The result has been supply chain challenges, business closures, and employee displacement. Not to mention the enormous personal impact on employees and their loved ones. Many of our employees made the ultimate sacrifice at the cost of their lives.

The pandemic has caused many workers to assess their employment situation, resulting in mass resignations as workers leave their jobs.

It’s not a big resignation per se, but the pandemic and various business challenges are causing business owners, especially older baby boomers, to ask themselves what’s next for their businesses.

Market turmoil may present lucrative opportunities for business combinations.

Is it time to consider selling your business and retiring to a tropical island (or spending more time playing golf or playing with your grandchildren)?

With trillions of dollars of private equity on the market, continued uncertainty over the impact of the pandemic, and the benefits to be gained from business consolidation, it may be a good time to consider the next phase of your business. not.

Market turmoil can create opportunities for business combinations, turning a very difficult time into a win-win situation for all involved.

Tips for success

If you’re thinking of selling your business to take advantage of these opportunities, here are 10 tips to consider.

1. plan aheadDon’t wait. Before planning a sale, make sure your business records are organized and up to date. A well-organized business makes a good impression on buyers and makes the sales process easier.

2. hire an investment bankerEven before you consider selling your business, it’s beneficial to connect with an investment banker who knows your industry well.

An experienced investment banker can position your business for sale, evaluate your business to maximize revenue, and assist with the sales process itself.

Investment bankers tend to focus on a specific industry, so choose a bank with manufacturing expertise in your industry sector.

Seek out, interview, and engage people who share your sensibilities, have the necessary expertise, and have demonstrated success in identifying buyers and closing deals.

3. Surround yourself with competent advisorsHaving a good accounting firm and legal counsel is invaluable in preparing for and assisting in the sale of your business.

There are many aspects of the sales process that occur in parallel. The buyer’s due diligence process reviews financial issues, entity his governance, ownership, contracts, employment issues, employee benefits, real estate, environmental issues, and more.

They understand your business, facilitate the due diligence process, address any issues that surface, use their experience to help you sweat less and worry less, and ultimately help you document the deal. Having a capable accountant and attorney gets you in. A good alternative for a smooth process and desired results. I need a village.

Four. Consider tax implicationsUse our advisors to evaluate the most tax efficient way to sell your business.

Ways to sell a business are asset sales, stock sales, mergers, and in some states, the stock exchange. Each method of sale comes with varying tax implications that affect the final take-home pay of the business owner.

Asset sales may be subject to two tiers of taxes. Subsequent to entity level taxes, tax is levied on the owner upon distribution of the net sale proceeds.

Other forms of sales transactions may be subject to only one level of tax at the owner level.

5. Get your financial statements auditedNot all companies have their financial statements audited, but audited financial statements help buyers evaluate companies by providing the auditor’s assessment of the company’s financial condition.

Having a reputable auditing firm increases the company’s credibility and speeds up the review and assessment of the company’s financial position.

6. sign the NDABefore sharing company information with others, ensure that both parties have signed a non-disclosure agreement to keep the information confidential.

A company’s proprietary information and trade secrets are valuable assets and all companies should take precautions to protect this information.

Firms should exercise special care in dealing with competitors as potential buyers, and only when it becomes clear that a transaction with that buyer is likely to occur, the most confidential We recommend sharing information in waves so that high information is shared.

7. with solutionEvery business has its own problems and challenges to deal with. An embarrassing legal issue may be pending or there may be an environmental hazard on your property.

Don’t put your head in the sand. Understand how you intend to handle difficult situations in order to minimize the impact on buyers.

8. employee advocateIf you plan to bring your employees into the deal, make sure they are treated appropriately to ensure sales success.

In many transactions, the seller’s workforce is key to business success. Mapping employee benefits from seller to buyer so that employees have access to at least the same benefits they are accustomed to can help reduce employee anxiety, which is a natural part of change. Helpful.

9. Don’t forget to look closer to homeThink of the next generation of family members and current employees as buyers of your business. No one knows more about business than they do.

Ten. keep the faithThe sales process takes a long time and has many twists and turns and ups and downs. Be reasonable, patient, open and flexible. If it is intended, it will happen.


About the author: Donna Brooks is a partner of Shipman & Goodwin LLP He is responsible for business and finance practices, advising on business organization, business operations and contracting, entity governance, asset and fund management, finance, capital raising, securities offerings, stock compensation, joint ventures, mergers and acquisitions. increase.

For more information, Shipman ManufacturingPlease contact us Alfredo Fernandez (860.251.5353; afernandez@goodwin.com).

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