John Chisholm, a chartered accountant going to go below. But the most impor- and, before going to the table, they must
and certified financial planner and part- tant thing is what you net after-tax. If know everything about their business.
ner at SB Partners in Burlington, Ont. you have a good sense of that, you’re bet- To get the best possible sale price, she
“It’s always best to do as much plan- ter prepared to know what you’ll com- suggests owners clean up their financial
ning around that prior to the start, so promise on and what the bottom line is.” statements, eliminate costs, improve the
you’re not feeling under pressure to make He also recommends putting together bottom line and hire outside experts to
a decision when you’re in a meeting try- a good team of advisors — consisting of a help with negotiations.
ing to negotiate a deal.” financial institution and tax accounting “If it’s a sizeable transaction you might
A big part of deal-making, he says, is and legal personnel— to help the seller want to hire a top-tier investment bank
figuring out ahead of time what potential figure out the best approach to transfer- to help you with the details. If it’s a small
scenarios might arise during negotiations ring the business and to ensure that the transaction you might be able to do it
for a business sale and devising a plan of seller gets enough after-tax income. with your accountant and lawyer. It de-
action for each possibility. The advisory team, he says, also pends on the size and how complex the
“Have Plan A, B, and C prepared be- brings a dispassionate outlook to the ta- transaction would be.”
fore you start negotiations,” he advises. ble—something sellers often lack. According to Francis, sellers—and
“Always have your bottom line so you’re “The problem, sometimes, is the objec- sometimes buyers — often underestimate
not reacting to the other side. Also, en- tivity that the seller brings to the table. the time it takes to negotiate the deal.
sure you know your strategy. It gives you It may be that they have created the “It can take up to a couple years of
more agility to respond to what you’re business from scratch and have a very preparation and planning to sell your
looking for in a transaction.” personal attachment to the business that business,” she says. “It’s not something
When a seller goes to the negotiat- may overshadow what the marketplace is you can do really quickly. It’s going to be
ing table, they should also have a good willing to pay.” one of the biggest financial transactions
handle on the worth of their business and Loren Francis, portfolio manager in your lifetime so you certainly need to
what they need in profit after taxes are and vice-president at Barometer Capi- put the proper planning into it.”
paid, advises Chisholm. tal Management Inc. in Toronto, says a When the vendor and a buyer eventu-
“You have to enter the negotiations seller must realize that negotiations take ally do get together to negotiate a deal,
with a pretty hard floor that you’re not a substantial amount of time and effort a major factor in whether the talks are
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