Planning Successfully - The Do's and Don'ts of Selling Your Business
Interview with Rett Peaden
Shareholder with Davis, Matthews & Quigley, P.C
Mergers & Acquisitions; Business Law; Taxation; Estate Planning & Wealth Management
Who buys businesses?
Strategic Buyers – Want to grow their business and/or remove a competitor
Financial Buyers – Want to make a business more profitable and sell it again within short period
Management/Employees – Have good knowledge of business and vested reason for its success
Family – May have personal as well as financial reasons to buy business
What are the roles of advisors?
Pre-Sale Consultants – help you position your business to sell
Appraisers – help you determine what your business is worth
Accountants – help you keep your books in order and offer independent financial advice during
the sale process
Business Brokers/Investment Bankers – help you market your business and realize maximum
value; may advise you and shepherd you through the sales process
Attorneys – help you structure your business before a sale and evaluate and draft legal
agreements related to the sale; may advise and shepherd you through the sales process
What types of transactions are there?
Sellers typically prefer stock sales for tax and non-tax reasons. Selling stock usually means
paying tax at long-term capital gains rates. Liabilities of the business pass along with the stock of
the business.
Buyers typically prefer asset sales for tax and non-tax reasons. Buying assets allows the buyer to
depreciate the purchased assets thereby realizing a long-term tax benefit. A buyer can cherry pick
assets and liabilities in the asset sale and does not have to take the bad along with the good.
More about our guest Rett Peaden:
Rett’s practice focuses on helping the owners of closely-held businesses and professional services firms exit their businesses, whether that involves selling the business or transferring it to the next generation. Getting a business onto a solid footing with regard to succession planning is essential, and Rett is well-versed in sophisticated tax strategies and entity structuring techniques that may be needed. He will also advise on and guide clients through strategic acquisitions to grow their own businesses. Rett regularly counsels clients on corporate, partnership, and related tax-planning matters, including the negotiation and preparation of mergers and acquisitions agreements, the drafting of shareholders agreements, the formation of limited partnerships and limited liability companies, the structuring of inbound investment opportunities for foreign nationals, the creation and operation of private foundations and public charities, and the review and drafting of executive compensation agreements. In connection with advising the owners of closely-held businesses, Rett has developed a particular interest in the taxation of pass-through entities such as S-Corporations, partnerships, and trusts.
Preserving legacy. The estate planning side of the practice, often done for the owners of closely held businesses, is highly personal, involving an individual’s legacy and the achievements of a lifetime. Rett’s purpose is to help his clients prepare for the future, provide for their families, and accomplish their long-term personal and charitable goals. In doing so, he works to develop plans that are well thought out and emphasize preserving wealth from unnecessary taxes and unanticipated risks. He knows how to take family dynamics into account, and draws insights from his work in business exit-planning and trust and estate administration to help families plan with foresight to avoid problems that could happen later on. Rett is often called upon by other professionals to advise them on the complicated income and transfer tax issues that can arise in the context of trusts and estates. On the trust and estate administration side of the practice,
