december2022january2023 - 23

FEATURE
To achieve the desired goals,
the business needs to be
financially solid.
WHERE IS THE CLIENT AT
NOW?
Once you understand your client's
goals, you can start looking at where
the business is now. To achieve the
desired goals, the business needs to
be financially solid. Consider:
* The business' current value
* Other personal investments/income
Once you know what the client's
goals are, you can create a plan to get
the client from point A to point B.
DEVELOP A PLAN
Creating a plan will help your client
prepare for the sale of the business
and achieve the client's end goals.
When developing a plan, there are
a few important things to consider,
including:
ARE CHANGES NEEDED TO
REACH THE GOALS OF THE
SALE?
In many cases, business changes will
need to be made to reach the goals
of the sale. Consider which must be
implemented.
* Does the business need to increase
revenue, cash flow, or profitability?
* Does it need more staff?
* Does it have standard operating procedures
(SOPs) in place? SOPs make
it easier for the owner to step down
without interrupting operations.
* Does it need to invest in
more marketing?
Once you have identified what
needs to be done to get the business
into position for a sale, you can
develop a plan to implement these
changes. If the client plans to sell
the business in 10 years, it may not
be necessary to be aggressive with
changes. However, if the goal is to sell
in the next few years, more significant
changes may need to be made in the
short-term to ensure staff is in place
and the business is profitable enough
to fetch the desired price.
IS THE CLIENT WILLING TO
FINANCE? IF SO, HOW
MUCH?
Consider whether the client is
willing to finance, and if the
client is open to the idea, how
much would the client would be
willing to finance? For example,
a buyer may want to put down
20% and pay 10% per year for
the next eight years. Is this an
arrangement worth considering?
What is the risk tolerance?
Financing can make the business
more attractive to buyers,
but there is always the risk
that the business may go under
before the balance is paid.
ARE THERE POTENTIAL
BUYERS THE CLIENT
CAN APPROACH?
Does the client know of any
potential buyers who can be
approached about the sale?
Potential buyers could be
competitors, trade organizations,
suppliers, or even key
employees. If the client is
having difficulty pinpointing
potential buyers, a broker can
help. Once you have a plan, it's
important to review it regularly
and make changes as needed
until it's time to put the business
up for sale.
KEEP A TIGHT LID ON
THE PLAN
When preparing a business for
sale, it's important to be cautious
of whom your client shares the
details with. The timing needs
to be right. If word spreads that
your client is looking to sell, an
employee might leave and take
some critical knowledge or key
customers along with them.
With the right plan and
strategy, you can help your
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client prepare the business for a
successful sale. Understanding the
client's goals and the current state of
the business can help you develop a
plan that gets the client to the goal. ■
Christopher Hayden, CPA, CMA, CGMA is
the managing partner of Hayden Nelson &
Yoder, a CPA firm based in Pennsylvania.
You can learn more about him and/or the
firm on their website https://hnycpas.com/.
https://www.hnycpas.com/ https://zoho.com/cpa http://www.CPAPracticeAdvisor.com
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