The Professionals Involved Helping a Client Sell a Business Reviewed by Momizat on . Meet Your Advisory Team Selling a business is a one-time process for most owners. It is also a harrowing process involving professionals in many disciplines. He Meet Your Advisory Team Selling a business is a one-time process for most owners. It is also a harrowing process involving professionals in many disciplines. He Rating: 0
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The Professionals Involved Helping a Client Sell a Business

Meet Your Advisory Team

Selling a business is a one-time process for most owners. It is also a harrowing process involving professionals in many disciplines. Here is a description of the primary people assisting in the process.

Selling a business is a one-time process for most owners.  It is also a harrowing process involving professionals in many disciplines.  Here is a description of the primary people assisting in the process.


The appraiser would provide the owner an independent look at their business.  It is rare for a buyer to base their offer on the value contained in an appraisal commissioned by the seller regardless of the quality and professionalism of the appraisal.  Rather, what many sellers need is a consultation with a qualified appraiser where they discuss the business’ value drivers, describe how earnings and cash flow are normalized, look at the business’ history and suggest ways of presenting it so a buyer would find it more attractive; and explain the many ways the business could be valued and what different classes of buyers would offer.  Nevertheless, in some instances, and especially for large businesses, it is important to have a formal conclusion of value, not for the benefit of the buyer, but for the seller.  The valuation process involves a thorough analysis of all facets of the business and requires a careful look without shortcuts or the overlooking or elimination of procedures.  The appraisal process should help identify unique assets, strategic value, and synergies for specific sellers the appraiser could help identify.  Even where the industry has formulas or standards for valuing the business, the appraiser could indicate ranges of selling prices based on rates of returns different categories of buyers would anticipate.  For sellers, the appraisal is an essential investment that adds value.  The standard of value for such an engagement is different from the typical valuation where the purpose is dictated by a protocol, professional standard, court, tax ruling, the necessity of selling, or a contemplated transaction.

The basis for the appraisal fees are usually determined in advance and are related to the type of work and expected time they will expend, not the value of the business.  Contingent fees cannot be paid to an independent appraiser.

Investment Banker

People wishing to sell their business will likely need an investment banker or business broker to identify and locate the buyer.  Their role includes suggesting possible selling prices and the reasoning for them, the presentation of the company in its best and most favorable position and to assist in the negotiation process as part of the team.  Compensation is usually an upfront retainer, plus a percentage of the sales price including all the extras embedded in the total package.  If a sale is not concluded, there is no additional fee other than the retainer.  In some cases where there is a signed contract with a buyer the investment banker’s fee, or a percentage of that fee, becomes payable even if the deal doesn’t close if the seller changes their mind.  The amount of work performed by investment bankers can range from extensive involvement leading the process and preparing the selling memorandum to as little as a brief introduction to the buyer.  In any event, if the business is sold to the person they introduced, they will have earned their fee.

Business Consultant

A business consultant does many of the same things as an investment banker, but doesn’t introduce or find the buyer.  They are usually paid a fee which can contain a bonus clause based upon their contribution to the deal getting done and the final price.  They could write the “book” and help present or restructure the company to make it more attractive for a buyer.

The Book

Not a person, but a necessary “player.”  In order to sell a business a “book” is needed.  This is usually a selling memorandum or company presentation package which is similar to a business plan.  It should contain all the information a buyer, and the buyer’s lawyers, accountants, advisors, and other team members would want to see.  At a minimum, it should have a summary of the company’s history, their market and customer information, geographic and environmental issues, product and production information, personnel and benefit information, web sales and traffic, customer and vendor data, warranty claims, contracts, leases, methods of obtaining sales, delivery of product and services, descriptions of the day-to-day activities of the owners that would be leaving, and the past five years financial statements and tax returns.

Many deals start out where the owner does not want to pay to have a “book” prepared, and where the prospective buyer says it is not necessary.  However, regardless of original intentions, some sort of book will be needed because there will be “anonymous” back office financial and other advisors who will need to have the information before they could advise their client on the best course for them.  The book then gets put together, in a haphazard and rushed manner, and in a way that does not present the company in the best light.  The client usually has taken pains to present the products they sell in the most appealing way.  Why not for the entire company which is a much more important transaction?  If the client was selling a car, he would get a car wash first.  Why not do the cosmetics for the entire business?  Advance efforts pay great dividends.


The lawyer is necessary to prepare and/or review the contracts, legal issues, possibly assist in the negotiations and to put the seller in the best legal posture with the most protection.  The lawyer also reviews the tax structure of the deal [along with the accountant] and covers any environmental, product liability, intellectual property, personnel, and warranty issues.  The attorney should be engaged early on in the process since the seller’s contracts should be reviewed for transferability and confidentiality agreements will need to be prepared.  The lawyer usually receives a fee, the basis of which is negotiated in advance.  It could be a combination of initial retainer, actual billing based on time charges, value added, and dollar value of the entire transaction.


The accountant’s role would be to prepare their client for the maze of events that lead to the culmination of the transaction; and then to be there afterwards to financially ease them into their new situation or status.

The CPA starts by helping the client articulate their thoughts and projects them into an effective plan or course of action.  Sometimes clients simply want far more than is sensible for a buyer; other times owners sell themselves and their businesses short and underestimate their real value in the marketplace.  To that end, the accountant would assist, along with the appraiser and investment banker, in identifying unique and/or strategic value for a particular class of potential purchasers.  The accountant would also monitor the negotiations and contracts to see that they are on target with the client’s wishes and goals and to also be there to help the client and team quickly adapt to changing situations.

The accountant’s role is also to develop the tax plan that determines the nature of the income and assist with the allocation of the purchase price (with appropriate appraisals).  Estate tax aspects are also considered.  Where an earn-out or extended payment is part of the price or terms, realistic provisions can be constructed, and parameters and safeguards developed for monitoring the post-sale performance.  Accountants can also assist in quantifying post sale cash flow for the client.

Accountants can also work with the client’s staff to develop raw data in the financial area, assist in the preparation of any forecasts and projections and help with necessary recasting of the financial statements.

Fees for the accountant are usually on a fixed fee for the project or for various stages of the project, or time basis, and occasionally provide for a bonus to be negotiated afterwards with the client.  If accountants provide any attest services for the client, they are precluded from accepting any form of contingent fee.

Insurance Agent

Risk protection has become extremely complicated and it is important to have an experienced insurance agent review policies and also suggest necessary coverage.  This is an added, but necessary step in the process.  Additionally, depending upon the nature of the business and ownership transfer, certain liabilities might need to be retained by the seller that could be avoided with the appropriate insurance or heads-up from the agent.  Occasionally where the seller will remain with the company afterwards, life or disability insurance on them might also be appropriate; or for similar coverage on the buyer.

Investment Advisor or Manager

An important part of the process is the seller’s post-sale cash flow from the sale’s proceeds.  Here an investment manager, working with the tax advisor, can suggest methods of investing the net proceeds that would indicate the cash flow the seller could expect.  The investment manager would not only consider the available funds, but also coordinate it with the seller’s other assets and cash flow sources and could present a comprehensive plan to maximize cash flow while considering tax minimization and risk.

Information Technology Consultant

Every business is dependent on technology.  A review by an IT professional could determine adequacy of the software, hardware, uses of storage and back up, as well as making sure the proper and current licenses are in place.  If substantial business is web-based, then a review of the sites and customer security should also be performed.

Marketing or Brand Advisor

Marketing has become extremely important, and the seller’s marketing programs and applicability should be presented in the best manner possible.  Along with this should be indications of the value of the intellectual property and the ownership or licensing and royalty agreements.

Due Diligence Team

When the letter of intent is executed, a due diligence team will be sent in to review the validity of the representations including the systems, and financial controls, reports and statements.  This is the buyer’s responsibility and prerogative but the seller needs to understand the process and how “public” it could become based on who will need to know about the pending sale.

Investigation Service

Occasionally it is appropriate for the buyer to engage an investigative service to review backgrounds of the present owner and key personnel of the company being sold.  At other times it might be necessary for the seller to review the buyer’s history especially if there will be a substantial and extended payment terms and period.


The above indicates the many people involved in the process.  Depending on circumstances, there could be others such as an engineer, scientist, physician, employee benefits specialist, or immigration or intellectual property attorney.

Offering a business for sale is costly and time consuming and can draw time away from the buyer continuing to operate their business in the manner they are accustomed to.  Starting the process is a big step and it is essential the seller understands the process and the various professionals they will need to engage and interact with.

For many, there is only one opportunity to get it done right.  It is essential that the proper team of advisors be assembled to assist in getting it done right.

Edward Mendlowitz, CPA, ABV, CFF, is partner with WithumSmith+Brown, PC, in New Brunswick, New Jersey. Mr. Mendlowitz is one of Accounting Today’s 100 Most Influential People. He has over 40 years of public accounting experience, is a licensed Certified Public Accountant in the states of New Jersey and New York. He writes a twice a week blog at Mr. Mendlowitz can be contacted at: (732) 964-9329 or e-mail to:

The National Association of Certified Valuators and Analysts (NACVA) supports the users of business and intangible asset valuation services and financial forensic services, including damages determinations of all kinds and fraud detection and prevention, by training and certifying financial professionals in these disciplines.

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