Who’s Involved in Selling or Buying a Business in Florida?
What Parties are Involved During a Business Acquisition?
You might be surprised to find out just how many people it takes to pull off a successful business acquisition. Working with the right professionals is an essential part of avoiding legal penalties, liability, and unnecessary expenses when buying or selling a company. Ideally, the buyer and the seller’s teams will both collaborate to reach the best outcome for all involved. Here are some of the professionals that you should consider enlisting for this type of business transaction.
The Buyer
The buyer and the seller are the primary parties in any business acquisition. Each has their own interests and obligations, but that doesn’t mean that they need to be at odds with each other. The buyer is responsible for finding target businesses and understanding their chosen industry, key performance indicators for that industry, and their goals for purchasing a business. Their team will be in charge of assessing the business in question and preventing problems before they can threaten the deal.
The Seller
The seller, on the other hand, needs to be sure that their business is ready to sell. This includes having at least three years of tax returns and making sure that all financial documents are ready to be reviewed by the other party. They shouldn’t be involved in any sort of litigation. Documents need to be in order, contracts in place, and titles to assets will need to be updated, too. The seller’s team is responsible for accurately representing the company while also getting as much as they can for its sale.
Business Brokers
Business brokers act as intermediaries between buyers and sellers. They will help facilitate the business acquisition in numerous ways, such as by locating potential buyers or sellers, qualifying prospects, and guiding their clients through the challenges of the acquisition process. Typically, business brokers work with small or mid-sized businesses, sometimes choosing to specialize in specific industries.
Merger and Acquisition (M&A) Firms
M&A firms offer a more comprehensive range of support, guidance, and services when compared to traditional business brokers. On top of their intermediary duties, these firms can also provide strategic advice, assist with due diligence, and help structure complex deals. Another difference is that M&A firms usually work with larger businesses and handle high-value transactions. They might even offer consulting services, which can help their clients prepare for the sale or business acquisition, optimize their operations, and maximize the value of their companies.
Financing Professionals
Financial professionals play a vital part in helping buyers secure the funds necessary for their business acquisition. Additionally, they can assist with structuring the deal (potentially through a blend of debt and equity financing), and evaluating important factors like the buyer’s credit, the target company’s financial health, and the overall viability of the transaction so that they can determine the best available financing options. Some financial professionals to consider enlisting include:
- Commercial bankers provide loans, lines of credit, and other debt financing options.
- Investment bankers can help raise capital by issuing stocks, bonds, or other securities.
- Private equity firms provide equity financing in exchange for stake in the company.
The Buyer’s Attorney
The buyer’s attorney plays a crucial role in protecting the buyer’s interests throughout the acquisition process, such as by conducting due diligence to identify any legal risks or liabilities associated with the target company. This also includes reviewing contracts, licenses, permits, intellectual property, and any ongoing or potential legal disputes. Their legal acumen is necessary for drafting and negotiating the letter of intent (LOI) and the purchase agreement, which are essential documents that outline the terms and conditions of the transaction. The buyer’s attorney will also advise on the optimal legal structure for the acquisition, assist with obtaining necessary approvals and consents, and ensure compliance with relevant laws and regulations.
The Seller’s Attorney
The seller’s attorney is responsible for protecting their client’s interests and ensuring a smooth transaction. They will review and negotiate the proposed LOI and purchase agreement, focusing on representations and warranties, indemnification, and closing conditions. Their chosen attorney will also help provide due diligence materials to the other side while ensuring that the company’s confidential information is kept safe. They can also use their expertise to advise on the deal’s potential tax implications and help structure the transaction in a tax-efficient manner. The seller will need them to draft their contracts and negotiate any agreements, too, such as non-compete and employment agreements for key personnel, and assist with the transfer of licenses, permits, and contracts.
Tax Advisors
Because of the complexities involved, the tax consequences of your business acquisition are going to require a dedicated tax advisor to safely navigate. Your tax advisor will work to minimize tax burdens, avoid potential tax penalties, and maintain compliance with the Internal Revenue Service (IRS) and state agencies. They can also advise on the company’s ideal tax structure. Tax statements and similar documents will play into the company’s valuation, too.
Wealth Advisors or Financial Planners
Planning for the aftermath of the transaction is as important as any other stage of a business acquisition. The seller should think about working with a wealth advisor or financial planner to help make the most of the sale’s proceeds. From investing decisions to growth strategies, having this professional on your team is foundational to preserving and maximizing the capital that you worked so hard to create as a business owner.
Business Accountants
One thing to keep in mind is that the accountant that you already have might not be the best fit for your business acquisition. You want to choose one that has significant experience with these types of projects. That way, they’ll be able to help you satisfy the various tax implications and other expenses that can occur when buying or selling a business.
Insurance Brokers
Insurance can provide an extra layer of protection during your business acquisition and help offset the costs of a bad deal. They can also help you evaluate and decide on the right policies for your company after completing the sale. In other words, engaging with an insurance broker can protect your bottom line well into the future.
If you’re looking to buy a business or sell the one you currently own, then contact us for help with your business acquisition or sale by calling 727-279-5037 or by scheduling your consultation with our corporate attorney through our online calendar.
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