The Seller’s Guide To Preparing For Life After Sale

Selling a company is a time-consuming and emotional process that often leaves little time for the owner and their business to consider post-sale circumstances. It’s not uncommon for CEOs and entrepreneurs—already busy running their firms day to day — to focus entirely on valuation and closing a deal, but the preparation for that sale and life after should not be overlooked.

Today’s article touches on the following:

• Pre-Sale Questions
• Personal Wealth Planning
• Post-Transaction Roles
• Successor Liability

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Pre-Sale Questions

Before closing a deal, it’s important for the business owner to spend time thinking through the post-sale plan and what they want their business and life to be like. Advance planning will help the business owner find the right partners, arrive at the right deal, and seamlessly transition into their desired lifestyle.

Personal Wealth Planning

Planning for the implications the transaction will have on the business owner’s personal financial health is a crucial step in preparing for life after the sale. Andrew Cardone, Vice President of Investments at Wells Fargo, shared the following questions that business owners should answer prior to transacting to help ensure a more positive outcome for personal wealth in the years following a sale.

1. Have I conducted a goals-based analysis with an advisor?
2. When was the last time I reviewed my investment portfolio’s exposures?
3. Am I effectively managing my personal cash to achieve the highest yield possible?
4. Is my business maximizing 401K, pension, and other vehicles to shelter my income?
5. When was the last time I reviewed my estate plan with an advisor?
6. When was the last time I discussed my investment plan with my family and an advisor?
7. What are my philanthropic intentions, and have I discussed these with an advisor?
8. Am I properly insured?

To read more on each of the above questions, check out the full article here.

Post-Transaction Roles

Generally speaking, seller and buyer plans fall into one of four categories (see below). Before pursuing a deal, the business owner needs to decide what role they want to play in the company after the sale, and this intent should be clearly communicated in the preliminary materials the advisor shares with potential buyers.

To avoid post-transaction litigation, it’s important to identify all knowable liabilities and specify who is assuming what when drafting the purchase agreement. An experienced buyer will often uncover much of the liability risk during due diligence, and a good M&A advisor can help navigate and negotiate the business owner’s rights as a seller.

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NOTE: The information in this article and associated ebook does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only.