Posted by & filed under Accounting Careers, Corporate Restructuring, Taxation & Planning.

In the coming years many small private companies will be up for sale, due to the fact that Baby Boomers will be retiring and hoping to cash in on the sale  of their business. 

Grooming a business for sale takes time, which means that you need to get started well in advance. Your reward is a feeling of confidence that you can seize the interest of more qualified buyers quickly, and possibly get a better price. You will also know that you are selling the business in the best possible condition. Here are few questions to ask?

  1. Are you in a position to respond if a strategic purchaser made an offer to purchase your business?
  2. Can you show a buyer a business plan that articulates your growth and strategy and prospects?
  3. Is there a contingency plan so that the business can continue without you if your personal or family circumstances change suddenly?

What is your Business worth?

Do you know what value your business might achieve in the current environment? 

It may prove beneficial to discover what multiples comparable businesses have 

sold at should an unsolicited opportunity  arise. Today’s combination of low interest rates, capital market liquidity,

and significant pools of private equity and debt are driving a high level of merger and acquisition activity. This can be

a great opportunity for business owners. The   competition for quality deals is intense, putting upward pressure on business 

 valuations.

 Great Oppotunity for Accountants

Accountants should be prepared to help their clients, prepare a business plan, including 3 year projections. The more a buyer can count on expected future revenue the easier it will be to sell the business. Prepare a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis.  A good analysis will help the buyer make an intelligent decision. Identify and document all expenditures that a buyer will likely not incur, such as outsized management bonuses, excessive salaries to family members etc.

Sales of Small Business, tax considerations

Accountants often specialize in the sale of Family Business, there are tax savings to the vendor when deals are completed according to the Income Tax Act. A professional Accountant can provide advise on the Small Business Deduction. Also there are Rollover rules which should be considered prior to the sale of a business.

Discussion Questions:

1. Do you agree with the article, that in a few years more and more family run businesses will be for sale?

2. Why should you hire a professional Accountant to help you with the sale of a business?

3. Should a chartered accountant use the service of an outside service provider, to help with the valuation of a business?

More information may be obtained from the KPMG web site. www.kpmg.com

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