Thinking of selling your business? Keep your accountant in the loop.
Selling your business is a big and often emotional decision followed by a fairly complex transaction that can have more options and clauses than you originally thought possible.
If you are thinking of selling your business or have been approached by a potential buyer you may be facing a lot of questions both financial and personal. You’ve built the business and put in time and effort along the way, consequently the decision to leave it and move on to something else can be overwhelming and emotional. You will want to ensure that if you do leave the business you are set up financially to make the transition to new ventures ever more successful.
In order to make sure your financial interests are best protected it is a good idea to consult your accountant early on in the negotiations and perhaps even before negotiations with a potential buyer begin. There are a number of tax opportunities that can be discussed and created surrounding the sale of a business; some of which require criteria to be met up to 2 years in advance.
One of the major decisions to consider is whether the transition will be an asset sale or a share sale. Often a buyer will prefer an asset sale due to the limited risk for them. As a seller you are often hoping for a share sale to make use of your lifetime capital gains exemption on the sale of your small business shares. Valuation and reimbursement of the company assets will come in to play regardless of which method of sale is agreed to and your accountant can help review the purchase agreement to ensure any other tax consequences are identified and mitigated.
Your accountant can also advise of alternatives for obtaining professional valuators and legal advisors to further assist you during the transaction. In addition, if you have had a long relationship with your accountant, they can offer you some non-biased emotional support for making the big decision.
If you are thinking of selling your business and would like to discuss the options and considerations surrounding those transactions, please contact us.Download a copy of this issue