The Role of a CPA in the Business Sale

Feb 14, 2023 | Established Business, Startups and Emerging Technologies

Selling a business is a big deal, it’s like getting married, you want to make sure everything is perfect before you say “I do.” And one of the key players in making sure everything is perfect is an experienced CPA.

As a business owner, you’re focused on running your business and making it successful, but when it comes to selling it, you may not be aware of all the financial considerations that need to be taken into account. That’s where a trusted CPA comes in. They will be your advisor and confidant during the sale process, from inception to post-closing.

Many business sales have the same common themes and concerns from Buyers. In essence, all investors are looking for the same thing – high returns, low risk. The job of the Seller is to tell their story through a well-thought presentation, and also through their numbers. One of the first steps to beginning the process is to ensure you have clean historical books and records, and a forecast of your business’s financial future. For many businesses, a forecast built on historical trends, management assumptions, and known data points is a nice-to-have and usually not updated. Your CPA resource can help put one together that shows the opportunity for a buyer to get their high return.

Part of the process that a buyer uses to de-risk future cash flows and limit their exposure to liabilities is called Due Diligence. During the diligence process, a buyer could have anywhere from 300 – 800 questions. That’s not a typo – depending on the sale structure and age of the business, hundreds of questions are typical. As an owner, you can’t stop running your business while trying to handle all these questions (oh, and one answer typically turns into another 2 questions). Your CPA will spearhead this process and keep the deal moving as quickly as possible to a closing. Keep in mind, time kills deals!

Negotiating a deal is another area that requires a roundtable of trusted advisors – CPA, legal, banker, etc. A typical process involves back and forth with a Buyer, and many levers to pull. A CPA with the right experience will advise you through the deal terms and deal structure, including working capital, tax structure, escrow and post-closing adjustments, transition agreements, and other significant factors. With experienced advisors on your team, you will be well-positioned to get the best deal.

The Business Sale Process is an adrenaline rush and one of the most exciting times while being a business owner. With the right planning, advisors, and resources on your team, you’re setup to get the best deal and most value for your business.