How to Help Small Business Clients Navigate the Sale Process

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In the second quarter of 2015, small business for-sale listings hit their highest peak in six years and still remain at high levels. As more small business owners plan their exits, it’s crucial they have trusted advisors in their corner helping them navigating various milestones in the sale process.

Accountants are often the first experts business owners turn to when they decide to pursue a sale. If they haven’t already, clients will come to you not only for support with determining their business’ value, but also for strategic advice about how to meet their personal and financial sale goals.

As a vital small business resource, it’s important for accountants to stay current on the small business economic landscape and other strategies to ensure clients’ successful sales.

Here are five recommendations to better support your small business clients through these complicated transactions.

1. Be prepared to help clients time their sale. Given how early on accountants are looped into a business owner’s sale plans, some burden falls on you to help him set optimal timing for listing his company. It’s in your best interests to understand historical business-for-sale trends (for instance, how the first quarter of any year often brings a bump in listings and buyers) before sitting down with clients to discuss sale strategies.

The current and projected lending environments are another key variable to bring up when assessing the best time to list. Now that the Fed has enacted its first interest rate hike in nine years, the 2016 lending market could begin to shift. And as we head into an election year, it’s also important to explore how political and policy issues could impact sale outcomes.

2. Track national and local business sale trends. There are a number of ways to measure your client’s small business value – from relying on price multiples to discounted cash-flow analyses. No matter which method you and your client pursue, you’ll need an accurate read on both nationwide and regional small business transaction data.

Each quarter, make it a point to review the median small business sale price and cash-flow multiples for the entire United States and your surrounding markets. Once you sit down with an owner who is ready to sell, take time to walk her through comp data – details about recently sold businesses of a comparable size and industry – so she has a context for what to expect.

3. Clarify how different sale choices will impact clients’ tax liability. A significant part of supporting small business clients during and after a sale is by managing their tax liability. Early in the process, make sure your client understands the various tax ramifications of certain transaction structures. Seller financing, for instance, remains a popular tool for facilitating small business deals. If your client is willing to offer financing (and thus receive his sale proceeds in installments over the next few years), be prepared to advise him on tactics for making the most of this deferred sales proceeds tactic and its tax benefits.

4. Quantify the business’ tangibles and intangibles. Small business owners will primarily seek out your help to get their financial house in order and assist them with preparing documents, like income, cash-flow, and seller’s discretionary earnings statements. At the same time, there are more abstract factors that must be quantified in order to accurately value your clients’ organization. Measuring these intangible factors is where sellers need a neutral third party to intervene most. Anticipate that you’ll help “score” details, such as the company’s location (i.e., is their neighborhood up-and-coming?), brand awareness and reputation (are they a respected name throughout their sector?), and any intellectual property.

5. Grow your network. Accountants play essential roles in guiding clients’ small business sales, but yours isn’t the only expertise they’ll need. Start proactively developing relationships with local and industry-relevant small business brokers, appraisers, and attorneys so you can easily refer clients to other professionals they can partner with at different points throughout the sale process.

Multiple signs indicate that 2016 could be another busy year in the small business for-sale market. Consider the above recommendations so you’ll be able to guide clients through painless – and profitable – transactions.

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