Be a Trusted Advisor on Exit Strategies

Source: AICPA CPA Insider

The following includes excerpts, reproduced with permission, from an article by Ronald Seigneur.

Our CPA practice has experienced increasing opportunities to work with owners and management of closely held businesses to address their exit strategies. Most often we are engaged on the sell side of a possible exit strategy, working with owners and senior management to provide assistance on various aspects, including assessing value, financial modeling, and assessing the related tax attributes associated with one or more exit-driven alternatives.

There are many seller-side hurdles to overcome, especially in today's turbulent economy. These challenges can include:

• Fewer potential buyers today and on the near-term horizon with access to the capital and financing required to complete an acquisition.
• The need for owners to adjust their expectations in terms of accepting lower valuation multiples as compared to prior periods, along with taking on more risk in the way of carrying back a larger share of the financing or being subject to expanded earn-out arrangements.
• Sellers who may want to retire or cut back on their working commitments, but who are hesitant to consider viable deals until “the market improves,” whenever that may be.
• Sellers who realize they cannot meet their personal financial goals given the current values and exit structures that can be realized.

In many instances, a qualified CPA advisor is in the best position to offer advice to owners of closely held businesses on the realities of the choices they have to best position their enterprise for eventual transition, even if it is something that may not occur for three years to five or more years.

The CPA advisor has ample opportunity to play a key role in assisting ownership on exit-planning objectives.

For the complete article, read “Exit Planning Opportunities.”

From AICPA CPA Insider, November 1, 2010, www.CPA2biz.com.