Hire an A+ Deal Team

Selling your business is probably one of the biggest decisions you will make in your lifetime. In addition to starting your business, choosing your spouse, and selecting the location of your residence, the decision to sell a business is a big deal. You will only get one chance; get it right!

There are five different skill sets required to sell a business:

  1. Accounting: someone needs to understand debits and credits to accurately reflect the financial performance of the business.
  2. Tax knowledge: there are serious tax consequences for every potential deal structure scenario that could cost you a fortune if you are not careful.
  3. Legal: you need legal advice from a lawyer who understands the legal challenges and risks in selling a business.
  4. M&A Advisor: selling a business is a full-time job. You need someone who can identify potential buyers, understands your industry, can develop and implement a plan for marketing your business, and can act as your representative during the inevitable difficult conversations and negotiations that occur during the transaction process.
  5. Wealth Management: if you are successful and realize more money than you ever dreamed of from the transaction, then you will need a professional to help you manage it.

Unless you are proficient in all five areas, you will need outside experts to help you navigate through the transaction. Here’s some more information on each of these professionals and what to look for as you build your team.


This person becomes a key player for you. Typically, buyers want a “virtual data room” where they can access all relevant data about your business: three-year financial statements (profit and loss, balance sheet, cash flow), three-year tax returns, client lists, client contracts, supplier lists, supplier contracts, employee payroll summary, building leases, etc. It is an enormous exercise to pull together a data room that is complete and meaningful. The sale process will go faster and there is less risk of you taking a “haircut” on the initial price offer if your data room is of high quality.

Your accountant will probably lead this effort. Notice I said “accountant.” If your business is small, then you will need to hire an outside accountant to lead this effort. A bookkeeper does not have the experience to handle such an enormous task. He or she should be a certified public accountant (CPA) and have transaction experience. It is ideal if your financials are audited. If not, then an annual review will probably suffice if it is a small transaction (under $1 million). If your deal size is greater than $1 million, then it may be worthwhile to invest a total of $50,000 to $60,000 to get your financial statements audited. It gives more credence to the quality of your numbers. Make sure your accountant not only compiles the numbers but also understands them. In all probability buyers will want your accountant, not you, to answer detailed financial questions.

Tax Advisor

Please read this carefully. The person who does your tax returns may not be qualified to review the tax implications of your deal structure. You need a tax accountant or attorney who has deal experience. Remember you are on the hook if you get bad tax advice. A simple example may help you to understand. If you have an opportunity to provide a seller note or earn-out for a deferred portion of the purchase price, then tax implications may drive your decision. Earnouts can be taxed as ordinary income if they are tied to employment. Seller notes can be taxed as capital gains. Huge difference in your tax liability and can save you thousands (in bigger deals, millions) of dollars. This is one of your most important members of the team. It is worth repeating, hire a tax expert who has deal experience!


Be careful with this one. Your personal attorney may not be your best choice. Law is like medicine. You won’t go to a general practitioner if you have stomach cancer. The law is no different. Make sure you have an attorney with deal experience. They will be much more familiar with the potential minefields in a purchase agreement. While the business terms may be defined in a letter of intent prior to due diligence, the legal terms will be defined in the purchase agreement at closing. Your attorney should be aware of all your potential risks if something goes wrong with your company after the transaction has closed. Buyers have sued and collected from sellers post-transaction if certain warranties and representations are not clear in the contract. Inexperienced attorneys can cost you a fortune. Your M&A Advisor can be a great source for potential deal attorney leads. They know who the best ones are.

Mergers and Acquisitions Advisor

This individual is the quarterback of your team. The M&A Advisor leads the transaction process from start to finish. This person or company facilitates the transfer of a business from one owner to another. Carefully select this person/company according to your specific needs. There are four areas you should focus on to see if this person is a good fit for you and your business.

Deal Size

If your deal size is less than $1 million, you should hire a main street business broker. If your deal size is between $1 million and $100 million, then you should hire a lower middle market M&A Advisor.  If your deal size is over $100 million, then you should hire an investment banker.

Business brokers typically work with main street type businesses such as convenience stores, car washes, retail outlets, franchises, and commercial real estate. They will advertise your business through standard channels such as business-for-sale websites, Google advertising, direct mail, and newspapers. These tend to be simple transactions with standard purchase agreements and few variables to negotiate for either buyer or seller.

M&A Advisors will develop customized marketing campaigns to a targeted list of financial and strategic buyers. They will develop a teaser for the initial mailing, develop a detailed offering memorandum for interested buyers, and help you put together a professional management presentation for you and your team to communicate to all qualified buyers. Deal structures tend to be more complicated than simple business broker transactions. Given the size of these deals, data rooms are often required.

Investment bankers handle large, complicated transactions larger than $100 million. Either buyer or seller may be a public company that adds further complexity to the transaction. The deal could be an asset or stock. If it is a stock deal, then the banker must have a financial industry regulatory authority (FINRA) license. Make sure you chose the right intermediary for your deal size.

Industry Experience

While not mandatory, it helps if your intermediary knows and has successfully completed deals in your industry. This knowledge will help you achieve maximum value. Industry knowledge will help your adviser create a comprehensive list of potential buyers. Further, your adviser may know many of these buyers intimately, and what they are looking for in a deal. Knowing the subject matter will help them market your deal more effectively.

Deal Experience

Be sure your advisor has completed a number of deals successfully. You don’t want to be their first rodeo. Nothing is a substitute for experience. While every deal is different, you want an adviser who has faced your challenges and opportunities before. Experience will put money in your pocket. Advisers with gray hair are a good thing!


Skills are critical, but chemistry is equally important. Your M&A Advisor is the quarterback of your deal team. You need someone who can work with your accountant, tax adviser, lawyer, and potential buyers. They need a high degree of emotional intelligence. They need to know when to push and when to back off. They need to know how to negotiate with stubborn buyers and sell your business for maximum value. It is very important that it should be someone who everyone respects and trusts.

Wealth Advisor

Assuming you have a successful transaction, you will need advice on how to invest your new-found wealth. There are horror stories of former business owners who lost their fortunes because of dishonest or incompetent financial advisers.

Two pieces of advice:

  1. Select someone who is not paid commissions from insurance companies or mutual funds. Their fees should be based on the performance of your portfolio. Make sure their financial interests are in alignment with yours.
  2. Use your network to find your financial adviser. Chances are your professional and personal network contains a number of high net-worth individuals. Let them introduce you to the advisers they feel are most competent. Check references carefully. Take your time, even if you have to park your money in low-interest money market funds or certificates of deposit (CDs) until you find your adviser. You worked too hard and too long to build your wealth.

Selling a business is one of the four most important decisions in your life. Act accordingly. Do not try to go it alone, no matter how smart you are or how much business experience you have. We live in a world of complexity that requires specialization. You cannot be an expert in all areas. Build a team. The bigger your company and deal value, the more experienced team you will need. This is not the time to pinch pennies. You could cost yourself thousands, if not millions, of dollars if you do.