September 2020

Southport, CT -



To Ensure a Successful Outcome,

Know “Why”... Not Just “How Much”


Maximizing the value of your Company is critically important when selling a Company…but proceeds are not everything.Before pursuing a transaction, sellers should carefully evaluate the “why” behind a sale, not just ”how much”.

Identifying core financial and non-financial objectives at the outset will provide confidence and enthusiasm for a transaction, ultimately ensuring a more successful outcome.

 

Financial Objectives

·    Liquidity, Wealth and Estate Planning: In addition to liquidity to provide financial security and preserve a standard of living, transactions are a once-in-a-lifetime opportunity to transfer multi-generational wealth to loved ones in a tax-advantaged manner.  It is critical to start this wealth and estate planning process early, so starting with long term objectives can help maximize the impact of the transaction beyond just the closing. 

·    Partnership and Access to Growth Capital: Most business owners have self-financed their companies essentially “placing all of their chips” on the table at all times. Owners may choose to bring on a value-added partner by selling a portion of their company to a well-capitalized investor, who will welcome opportunities to deploy additional capital, accelerate growth, use their contacts/rolodex and build an infrastructure into growth initiatives or acquisitions. This partnership could be the best of both worlds for active owners, providing liquidity, retaining upside and bringing in needed expertise.

·    Philanthropy: Including philanthropy as an integral part of an exit strategy (such as donating shares/cash, establishing private foundations and creating donor-advised funds) allows the sellers to support causes that are near-and-dear to their heart while reducing tax exposure. Focusing on your impact outside of the business can be as rewarding as the achievements realized within the business. 


Non-Financial Objectives

·    (Re)defining Your Role with the Company: Owner... operator… manager… or all of them? While most buyers will require some level of involvement from a seller following the closing, a transaction can be a unique opportunity to reshape one’s preferred role at the company that meets his/her short-term and long-term objectives. A new partner may be able to provide an exciting recharged career and provide a seamless transition back to what is exciting for the seller.  Some owners would prefer a more passive role, but still staying engaged, such as a Board position.

·    Preserving Legacy: Many businesses serve as an extension of the owner’s vision to pursue purpose beyond profit (core values, commitment to the local community, brand integrity, and so on). If continuity of these values (‘preserving the legacy’) post-transaction is important, selecting the right buyer/investor/partner with a shared vision and cultural fit will be paramount and have value beyond proceeds. When comparing multiple offers, this is often the deciding factor.

·    Protecting employees: While not an accounting balance sheet line item, employees are always a critical asset of a Company and have undoubtedly contributed significantly to the firm’s success over the years. The right partner will value, retain, and provide an exciting future home for the staff. Be certain to know the buyer’s growth plan and its vision of the role of your employees and management team.  

·    “Smelling the Roses”: Building a company is rewarding, yet likely has been accompanied with significant personal trade-offs. Whether its spending more time with family, traveling the world or pursuing a new career, a transaction can be a great transition to a new chapter. And remember, you have earned it, so enjoy it! 


Final Thoughts

Selling a company should be an exercise to maximize “outcome” – not just proceeds. Owners need to think holistically about a transaction before embarking on a process to determine what is truly important and redefine and prioritize the definition of success.   


We are Here to Help

If we can help you maximize your outcome, please do not hesitate to reach out to any one on our team.

 
About Carter Morse & Goodrich

Located in Southport, Connecticut, Carter Morse & Goodrich is a boutique M&A advisory firm that represents founder-led and family-held businesses valued between $20 million and $200 million. 





For more than 30 years, the combination of our hands-on approach, senior banker attention, strategic guidance, seamless transaction execution and extensive network of domestic and international resources has enabled us to become a trusted advisor to hundreds of business owners.



CMG's Broker/Dealer affiliate, Carter Capital Corporation, is a FINRA member firm registered with the SEC and SIPC.

 
The Tide Mill Building, 99 Harbor Road, Southport, CT 06890



www.cartermorse.com