Any large business transaction, particularly a merger or acquisition, requires a well-coordinated team for success. Assembling your team early on makes a large difference between success and failure, whether you are in San Jose, California or Sydney, Australia.
The most critical advisors are your attorney and your accountant. If you are a business owner and you don’t have an attorney or an accountant advising your company, you need to get one now. Although either professional can “parachute in” to assist your company in the event of a sale, their advice to you will be much more efficient and effective if they have direct and long term experience with your company. Failing to have ongoing advice in legal, tax, and financial matters will likely result in the need for remedial work and higher expense in closing a business sale.
Finding a suitable attorney will likely be your first task in assembling your business team. As with any advisor, you should use your referral network to find a professional that is appropriate to your business. You should only choose someone who you believe can act as a trusted, strategic advisor in planning, growing, and selling your business, rather than someone who can merely produce documents. An attorney who you allow to attend your board and/or shareholder meetings and generally become familiar with your business will be able to advise you on building the proper foundation for an ultimate sale of your business. He or she will also be able to tailor their advice to the realities of your business and your own risk preferences.
Businesses will often have an attorney that they use for operational matters who is unfamiliar with the specifics of a merger or acquisition transaction. In these cases special acquisition counsel is retained, often at the recommendation of company counsel, to assist in the transaction. Special counsel should be brought in as soon as possible. If you have been presented with any type of proposal to sell your business, such as a letter of intent or term sheet, you should not sign any documents until you have had an attorney who is knowledgeable in mergers and acquisitions review them.
Your accountant should be familiar with generally accepted accounting principles, or GAAP, for your industry. As mentioned in an earlier blog posting, your company should not rely on tax-oriented financials in an acquisition, but should maintain financials based on GAAP to allow for accurate business valuation and comparison. Any accountant should be experienced with the tax issues facing your business’s operations and eventual sale. As your company grows, your accountant can recommend a controller and other potential employees who can perform daily accounting functions in-house. Like your attorney, it is critical that you view your accountant as a key advisor to your business, rather than as someone who merely prepares your company’s financial statements and tax returns.