Are you selling your business in San Diego? Are you looking for a CPA for selling your business? Now that you have decided to sell your business, you will need to determine if your company is fit to be sold and if your team is ready. Most of all, is your team mentally prepared for this type of transition? Business-owners that sell their businesses tend to want to keep the deal problem-free and secure, save money and make as much profit as they can as rapidly as possible.
It seems straightforward and simple on paper. In reality, acquisitions and mergers are anything but simple. From finding a buyer to pricing your business to drafting contracts and conducting due diligence. The path in front of business-owners is laden with serious financial weight and obstacles.
As a business-seller, you will most likely never engage in bigger deals at any other point throughout your lifetime. It is not an option to do it yourself. You will need the right San Diego CPA for business purchase by your side. Look at the main facets of the role of a CPA for business purchase consulting during mergers and acquisitions to see exactly why you need an accountant to sell your business.
Preliminary Valuations
How much can you sell your business for? There are no magical calculations to plug and play with. If you are thinking of selling you may already have a price tag in mind. Until you get a San Diego CPA’s input, however, your idea will remain an idea until the CPA confirms that you have the right preliminary valuation.
Objective valuations are provided by CPA’s to business sellers. Your accountant acts as the financial advisors to ascertain your liabilities and material assets. What you owe, what you own and what is included in the sale? Your San Diego CPA determines all of this.
More importantly, your accountant generates a picture of your income and timeline. He or she assigns concrete values to the more variable and flued aspects of your business. Equity statements, balance sheets, cash flows, and past earnings. Even the performance of the company related to market and economic conditions at large. Any liabilities lurking beneath will be revealed by the CPA.
Accountants Help You Structure And Organize Your Deal
A sale can refer to mergers between two companies which are similar. It can also refer to the formation of newer shell companies or new enterprises. Furthermore, it can also refer to a large conglomerate taking over another smaller company. You may be selling the assets of your company such as equipment and intellectual company, equity, majority stock ownership or a combination of any of these options.
The job of your CPA is to find out what you will net from this deal structure. What will be your maximum asking price with the least hassles? In this light, your CPA acts as a bridge, removing the language barrier between the world of finance and business owners. He or she breaks down the various options and informs you about the pros and cons.
On your team, without an accounting partner, you will need fluency about these types of things all on your own. If you are not fluent when it comes to financing, you won’t’ have an easy time selling your business. You might have difficulty in the negotiating table. You might not comprehend that you are on the hook when the deal is closed.
Your transactions might oblige you to remain involved in the business until you meet certain conditions. You might receive a part of the purchase pricing when the deal closes. Unless you know your way around earnouts, escrow, liquidity ratios and the like, a CPA will be to your benefit.
Now that you have decided to put your business on the market, you will need a CPA. In fact, accountants are such important parts of the selling process for businesses, that you might want to hire one even before you put your business up for sale. Some people say that selling your business without a CPA is like sky diving with no safety gear. Or parachute,
Recasting and Obtaining Financial Statements
Your potential buyers will want to see your business’ financial statements and history. They want to see the latest, most updated financial records in this period. In addition, any financial issues need to be recast to provide your business’ true value. If you are not sure about what it means to recast your financials, your San Diego CPA will explain everything.
The Value Of Your Business In San Diego
Your San Diego CPA can help you determine how much your business is truly worth. Even if some CPA’s are not experts in business valuations, they will be able to give you a pretty good idea of what buyers will want to see in terms of numbers. You don’t want to set the price too low or too high. Your CPA can set the price just right.
Setting Up A Structure
At times, your San Diego CPA might give you the advice to transfer part of your assets or business to a different entity or person. They may recommend setting up newer entities or dissolving your current entities before a sale happens. There are different components of every transition. The components exclusively depend on your specified situations. On the other hand, you may see circumstances in which business structures were modified before ales. Once there are signings of agreements, you will definitely want your San Diego CPA by your side.
Selling Structure
Before you put your business in the market, your San Diego CPA can let you know the pros and cons of selling your businesses either as a stock sale or as an asset sale. Between these two methods, the tax implications are substantial. Even if it is more common to do an asset sale, which buyers prefer, the advantages of stock sales are drastic. It may be extremely profitable to hold off until buyers are willing to accept stock sales.