What Would It Take To Buy You Out?

By Jeffrey Denning, CPA, ABV, CFF

I get it- you are so busy running your business that it's hard to make time to look out on the horizon. Yet we have heard that failing to plan is like planning to fail. We keep postponing and saying it will be easier to do it tomorrow.

What if tomorrow comes and you meet a serious buyer flush with cash and he or she pops the question? What would it take to buy you out?

The consensus of economic and industry forecasters is that there will be higher growth this year as spending on infrastructure and other delayed needs gets real. Whether buyers are looking to expand markets or add strong managers to help meet current and expected demand, there may be significant opportunities for mergers and consolidation.

As business and tax advisors, we worked with several clients recently to estimate a range of value for their business should they be asked the big question. We also helped them understand what that estimated value may mean to them in after tax dollars invested elsewhere. Then we compared that to their current lifestyle and spending.

These clients are now more informed and prepared should they start considering options like a sale/gift to family, a management buyout, or an outright sale and a walk away value. Each of these merits consideration and preparation.

Not sure where to start? We suggest that you:

  1. Start a conversation with your team and advisors
  2. Ask your advisors about the appraisal process
  3. Ask yourself how much money you would want or need to get out of your business if you did decide to sell

Just three simple steps that will help ensure that when and if the call comes, you’ll have the information you need to make an informed decision.

 Jeffrey Denning is a partner with Gilmore Jasion Mahler, LTD and leads the Firm’s forensic accounting and business valuation practice. 

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