Tag: Coordination-Series-1

The Coordination Series · Part 1 of 5

Most business owners call an M&A advisor the same month they decide to sell, which makes sense. They’re busy building a business, wearing (too) many hats and making sure their employees and customers are taken care of. But by the time they make that call, the biggest levers for preparation have already been pulled — or missed.

Two very different processes:

In one, an owner reaches out unprepared. A buyer has approached them or a competitor just sold to a PE firm doing a roll-up. But their CPA still needs to clean up the financials, and the tax structure was never designed with a sale in mind. Their wealth advisor oversees some retirement accounts but isn’t brought inside the tent to look at the business. No one ever sat down with them to model what life looks like after the sale. The owner wants to move forward quickly. Everything happens under pressure, on the buyer’s timeline, with real value left on the table because there wasn’t time to address what diligence would find.

In the other, the owner’s CPA, estate-planning attorney, tax & wealth advisor, and M&A counsel have been building toward this for years. Their CPA has ensured the financials are ready for a buy-side Quality of Earnings (QoE) review. Their estate-planning attorney restructured ownership while there was time to review options, and their tax & wealth advisor modeled an efficient deal structure alongside what “enough” actually looks like for their family. And before they executed the letter of intent (LOI), they brought in their M&A counsel to help negotiate the key deal points, rather than wait for final documentation. That process tends to move faster, holds up better under diligence, and gives the owner more leverage on price and terms.

The difference doesn’t have anything to do with who’s a better owner-operator. It’s which owner brought the right advisors into the room, and how early they got there. We’ve watched both versions play out enough times to know which an owner would choose, if anyone had told them they had the choice.

The Right Team

While many business owners have built a very capable team, they’re often under a false assumption. Job titles that work fine for running the business don’t map cleanly onto an M&A transaction. Their controller or outsourced bookkeeper capably prepares financials on a cash basis. A CPA with an eye toward the future is different. They make sure years of accrual and revenue-recognition policies will hold up once a buyer’s QoE team starts testing them.

Their CPA files tax returns for the family and the business, while their wealth advisor is kept separate, focused on investing their annual distributions. But the best tax outcomes require structures put in place years in advance, and those windows close quietly, without warning. Tax structures and the question only a wealth advisor can answer, “is this enough”, are really one conversation, not two.

Attorneys aren’t interchangeable either. Their corporate attorney set up the initial corporate structure and helps with regulatory issues and key customer contracts. But estate planning and M&A counsel are different roles. An estate-planning attorney’s best moves work well before a deal is in motion. M&A counsel has a completely different job, one that begins with the LOI negotiation and runs through closing, with the goal of mitigating the owner’s post-closing risk.

Over the next four posts, we’ll go through each of these in turn. What transaction specialists see that no one else does, and why timing matters. We’ll also discuss the specific ways we work alongside each of them throughout the sale process. As the fifth advisor on the team, BPCA’s job goes beyond marketing to buyers and negotiating valuation. We also ensure the other four advisors are coordinated and working towards a single timeline to close.

When does it make sense to talk to an M&A advisor? Earlier than most owners assume. A conversation about realistic valuation ranges, what buyers are actually paying right now, and where a business has gaps a buyer would flag. That’s information every other advisor on this list can put to use immediately, whether a sale happens next year or in five. Having that conversation early costs an owner nothing, and it usually makes every other conversation with their advisors more productive.

Next: The Numbers Have to Hold Up Long Before a Buyer Looks at Them.