Know These Things Before You Sell
If you are a business owner, there are three key pieces of information you should be reviewing on a regular basis: value, needs, and tax consequences.  Without this information, you’re keeping your financial future in the dark and quite probably leaving money on the table.

1.  Know Your Value.  Most business owners don’t get any kind of valuation done on a regular basis. Instead, they go by their gut feel or rumor in the marketplace. Unfortunately, what you hear so-and-so sold for is often either inaccurate or so separated from the deal structure (cash at close, earnouts, incentives, etc.) that the information isn’t of much value.   Business owners are rarely open about their sale price, making it hard to figure out what’s going on in the marketplace. Some business owners come up with their own value target based on what they need to retire or a certain round number in their head.  Unfortunately, these “it has to be worth” numbers are often higher than what the market will bear.  And yet other business owners are too conservative when it comes to value estimates.  The financial owner, who knows how to calculate fair market value based on EBITDA, multiples, and debt service can still overlook timely market considerations and buyer synergies that drive up goodwill.   Getting a regular estimate of value helps you plan better and make smarter choices on timing your business transition.
2. Get Proactive About Taxes.  Start looking at the tax game.  We’re in a very interesting tax climate right now, and the situation could change dramatically depending on who wins the next election.   Federal Capital Gains taxes are due to increase next year.  Currently at an all-time low of 15 percent, they could go up a to just under 25 percent.  Realistically, if your company is not on the market right now, the chances of selling yet in 2012 and taking advantage of the current rate are possible, but slim.  Have regular exit planning discussions with your tax accountant.  He or she can help you take advantage of any favorable tax windows and can find other ways to maximize the money you put in your pocket (rather than Uncle Sam’s) after a sale.
3.  Know What You Need.  Meet with your financial advisor.  Have some in-depth discussions about your future lifestyle expectations and what you’ll need to make that a reality.   Once you understand these three pieces of the puzzle, the decision to sell goes from a gut wrenching “should I or shouldn’t I” to a confident, informed decision.
This information provided by: Scott Bushkie