M&A Professionals
Selling a Business? Teaming Up With the Best Professional Advisors To Maximize Value.

The Role of the Broker, Accountant, Attorney, & Client
A broker really can add value. The accountantıs input and involvement are essential, and legal counsel can "make" and not "break" the deal.
     Selling a business is a team effort. The clientıs strengths are often judged based on the knowledge and ability of his professional advisors. It is important that each team member has the right education, training and experience, along with a high degree of integrity and professionalism.
     The following is a brief description of the role that each professional advisor and the client plays in a business sale transaction.

The Broker 

1 Prepare marketing document to present to prospective buyers. 
First impressions are very important. The marketing document needs to be a first class document. A good business broker will make every effort to fully understand the value of the business so the business can be presented it in its best possible light. The marketing  document will contain important financial information; therefore, it is important that the broker have a strong financial background and be able to work closely with the accountant in preparing this information.   
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2 Find the buyer. 
Clients often ask if they need to use a business broker to sell their business. Based on my experience, a good business broker will not only add value to the business, but will greatly enhance the possibility of completing the sale. Using a broker substantially increases the odds of having multiple buyers bidding for the business which generally results in an increased sales price. Brokers have access to extensive resources that allow them to identify qualified buyers. Prequalification of buyers by the broker helps the client avoid wasting time dealing with parties who would like to do a deal but really have no ability to do so.   
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3 Communicate and negotiate. 
A skilled broker can make a big difference in the negotiation process. As a lawyer, I am required by professional rules of conduct to communicate through buyerıs legal counsel. The broker can communicate directly with the buyer. This line of communication can be much more effective and is absolutely essential.   
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4 Value the business. 
Clients may either overvalue or undervalue their business. Overvaluation can result from unrealistic expectations or emotional attachment. Undervaluation generally results from a lack of familiarity with the marketability of the business or overall industry trends. A seasoned business broker who is involved in the purchase and sale of businesses every day can provide the client with a realistic sales price range. Realistic expectations will have a major impact on the ability to successfully complete the sale.   
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The Accountant 

1 Provide tax and financial analysis. 
The CPA will generally have the greatest familiarity with the clientıs financial and tax status. The CPA should be a valuable resource for financial information, financial analysis and tax planning relating to the transaction.   
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2 Participate in preparing marketing document. 
The CPA should play an integral role in preparing the financial information for the marketing document. Most privately owned companies minimize net income in order to minimize taxes. The company will need to revise or recast its financial statements to reflect increased historical net profit and cash flow as well as future net profit and cash flow.   
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3 Provide ideas and alternatives. 
The facts and circumstances are different in every transaction and it is definitely to the clientıs advantage to have an accountant and an attorney who can work well together to structure a successful transaction and to minimize taxes.   
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4 Act as the voice of reason. 
Many clients look to their CPA as a trusted business advisor in addition to someone who can provide tax and accounting services. An experienced accountant can serve as a good sounding board for the client on the basic business points of the transaction.   
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5 Value the business. 
Offers for the same business can come in all different shapes and sizes. The CPA can assist the client by providing an opinion as to the estimated value of the company and help assess the true value of different offers. This type of assistance is especially important where there are long-term payouts, performance payments and other arrangements that require detailed financial analysis to determine not only how the payout will operate over a period of time, but what its estimated current value is.   
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6 Review agreements and schedules. 
The CPA should review and approve the financial representations and warranties made by the client and should also make sure that any schedules dealing with financial and tax matters are accurate. The client should work closely with the CPA to prepare the financial information that will be part of the acquisition documents.   
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The Attorney

1 Qualifications. 
At a minimum, the attorney should have a strong tax background and specialize in the area of mergers and acquisitions. Each part of the various acquisition documents will involve unique legal, financial and tax issues. The attorney needs to have the skill and experience required to identify those issues and to make sure that the documents are written in a way that accurately reflects the transaction and adequately protects the client. 
     Selling a business involves balance sheets, income statements, cash flow statements, projections, financial ratios, evaluation methodologies and many other financial, tax and accounting driven issues. The attorney needs to have a strong financial, tax and accounting background to understand the transaction in order to accomplish the clientıs objectives.   
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2 Act as the Coach or Guide. 
The attorney should explain the sequence and importance of the various steps in the transaction, what the client should expect and how the client should deal with each step along the way. Experienced M&A counsel can help the parties stay focused on the most important issues and avoid expending time and energy, and the clientıs money, on issues that may be of little or no consequence.   
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3 Negotiate. 
Many times the client will need to look to the attorney as the primary advocate and negotiator in structuring the transaction. The attorney and the broker should both be strong and effective negotiators and advocates for the client.   
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4 Undertake tax planning and analysis. 
The attorney and CPA should work together to structure the transaction in a way that minimizes taxes. It is important that the attorney have a thorough understanding of the business / corporate and securities issues as well as the tax issues and be able to identify  where the expertise of other professionals may be required. Equally important will be the attorney's ability to clearly translate and interpret the issues in a way that the client can quickly and easily understand.   
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5 Prepare Letter of Intent. 
A Letter of Intent should be prepared by legal counsel which sets forth the basic deal points. The Letter of Intent will serve as the foundation for the transaction, therefore, it should be well thought out and properly prepared.   
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6 Marshall due diligence. 
The due diligence process can be extremely disruptive to the business. Legal counsel should work closely with the client to control the degree of and manner in which buyers conduct due diligence. Timing, location, confidentiality and procedures associated with due diligence all need to be addressed with a great deal of care.   
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7 Prepare documentation and schedules. 
Seller's counsel will generally prepare selected acquisition documents. In addition the client will be required to prepare numerous exhibits and schedules (with the assistance of legal counsel). The exhibits and schedules are an integral part of the acquisition documents. The attorney needs to make sure that the schedules are accurate and properly tailored to provide the requested information in a way that will minimize any potential future liability.   
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8 Create constructive relationships. 
The attorney should bring a positive, solution oriented attitude to the transaction and not an adversarial approach. Building good relationships generally translates into a more favorable deal for the client.   
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The Client 

1 “Captain” and “Most Valuable Player.” 
The buck stops here. Everyone else can plan, advocate and negotiate, but the client is the final decision maker. The client needs to provide clear direction to his professional advisers and make sure that he demands clarification on any issues that he does not understand.   
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2 Time allocation. 
The client will need to be very careful in allocating his time to avoid spending too much time on the sale and neglecting the continuing operations of the business. The sale of the business is generally very distracting and will require a great deal of extra effort on the part of the owner and selected key personnel.   
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3 Selecting the team. 
The client is responsible for selecting the professional advisers who will safely and successfully guide him through the merger and acquisition maze. The team will usually be selected based upon referrals from other trusted business acquaintances. Clients should, however, make some of their own inquiries about the advisers referred to them. Ask the referring party what their relationship is with that advisor and why he believes that he or she is the best person for the job. Clients should also not hesitate to ask their attorney, accountant or broker about their education and experience and should get referrals from other clients.   
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Estate Planner, Money Manager & Financial Planner 

A good estate planning attorney should be involved before the transaction is completed (or, if possible, before it is initiated) to make sure the client's estate plan will operate with the least amount of tax and government intervention possible. A financial planner can assist in providing a personal financial plan to accomplish the seller's lifestyle objectives and a good money manager can maximize the growth of the sales proceeds.    Top^


Roger L. Neu
This brochure was prepared by the Law Offices of Roger L. Neu, Inc. Mr. Neu specializes in privately held company mergers and acquisitions. With over 20 years of experience, Mr. Neu has been involved in successfully completing mergers and acquisitions for over 150 privately held businesses. Mr. Neu was a CPA with Price Waterhouse, later attended Loyola Law School, graduating with honors, and worked with a large Orange County law firm for four years before establishing his law firm in 1982.



Law Offices of Roger L. Neu, Inc.
Specializing in Mergers and Acquisitions, Entity Reorganizations, Business Contracts, Capital Formation and Business Tax Planning

Phone (949) 863-1700 | Fax (949) 863-1701 | 2040 Main Street, 9th Floor | Irvine, CA 92614

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