SELLING YOUR BUSINESS  •  PART FOUR 

SELLING YOUR BUSINESS  •  PART FOUR  

 

Defining Your Sale Priorities  

 

This is the step of intangibles — the step where you simply sit down and think. There are no right or wrong answers here, only what’s right for you.  

 

The buyer with the highest offer doesn’t always win. The seller has priorities too, both for the sale and for what comes after: the timing and form of payment, what the buyer expects of you after the sale, how much ongoing involvement you’ll have and for how long, and whether there are key employees you want to help protect through the process and beyond.  

 

This is where you define your priorities and objectives — both financial and non-financial. You want a clear picture of what’s important to you, and a framework for assessing offers when the time comes.  

 

Take a pad of paper, a journal, or whatever digital note app you use to think things through, and start considering the following:  

 

Timing of Payments  

When will you be paid — a lump sum up front, or a multi-year series of payments? How much do you want up front, and would you prefer more or less? What are the tax considerations for these payments? How will the buyer finance the purchase? The ongoing stability of the business is an important factor to weigh when thinking through the payment structure.  

 

Expectations for Ongoing Involvement  

Is there an expectation, on the part of either the seller or the buyer, that you’ll be retained after the sale? If so, under what conditions and terms, and for how long? Are funds held back as a condition of your continued involvement?  

 

Earn-Outs  

In some sales, the seller earns additional payments beyond the upfront price if the business meets agreed-upon performance milestones or financial targets — revenue, profit goals, regulatory approval, or customer growth, for example. Earn-outs typically run one to three years, though we’ve seen terms as long as five, with payments made on a pre-determined schedule.  

 

Care for Valued Employees  

A seller may build in a clause to both reward and safeguard loyal staff. If you want certain employees to have a defined place in the business after the sale, start planning for that now. Agreements can be structured so that key employees are kept in place for a set period .  

 

Family Involvement  

In a family business, a few questions need to be resolved. What will the role of family members be going forward — will any take on a lead role? These questions will factor into the deal itself. Managing the impact on a family is one of the foremost considerations in any sale.  

 

Family involvement is significant enough that it will be the sole topic of Part Five of this series.  

 

For Consideration  

  • If you had to sell today, what would be of greatest concern to you?  
  • How do you want employees to experience the transition?  
  • In a perfect world, what would your level of involvement with the business look like after the sale?  

 

Helping you plan to keep more of what your work for

 

This article is for general informational purposes and is not personalized financial, legal, or tax advice. Please consult with a qualified professional regarding your specific situation. Neither Cetera Wealth Services LLC nor any of its representatives may give legal or tax advice.  

Securities offered through Cetera Wealth Services LLC (doing insurance business in CA as CFGAN Insurance Agency LLC, CA Insurance Lic# 0644976), member FINRA/SIPC. Advisory services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity.  

 

 

Sean Bracey, Financial Advisor  

Three Pointe Drive, Suite 201, Brea, CA 92821  

(562) 902-6560 | www.Montagewealth.net