[IMGCAP(1)]As an accountant, you often serve as a primary source of business advice for your clients. So when a business owner begins the process of selling his or her business, it’s you they will likely come to for their first bit of advice.

While you may be well aware of the relevant financial and tax needs for your clients, there are many more aspects of a business sale where they may need insight. In order to provide the best service and advice, here are some important principles to keep in mind:

Think ahead: Make sure your client considers their lifestyle choice after the sale. Many will rush into sales but then be left unsure as to what to do with the proceeds from their sale, and what to do next with their life. Are they planning on buying a new business? Are they just retiring? What will they do to generate income? Getting these questions out of the way early will help guide the subsequent sales strategy and process.

Take advantage of other intermediaries: You may be the best advisor for the financial aspects of a sale, but encouraging a client to use an accredited business broker or valuation professional is also a good practice. Brokers who are members of the International Business Brokers Association, and who have the Certified Business Intermediary certification, are trained professionals. These experts can lend important business-selling insights and ease some of the transition responsibilities off of both yourself and your client.

You can concentrate on the often complicated tax and financial implications of a sale while he or she can focus on keeping their business value strong by operating successfully during the selling process. In addition, many business owners will benefit from the guidance of their attorney. Understanding the minute details of a business sale contract can be challenging. Be sure your client is getting the best advice possible from experts in each area.

Examine the open market: Many clients will have a family member, employee or friend in mind as the likely buyer of their business to make the transition easier. Unless they are set on this transition, encourage clients to market the business more broadly in order to evaluate all the sale options and potential buyer audiences. By listing online or through a broker on the open market, they can generate interest from multiple parties, and they may find that their business is worth much more than they originally thought. If greater levels of interest fail to appear, they can always fall back on their more familiar buyer candidates.

Understand the tax consequences: You may be well aware of most of these details but also make sure your client knows of the various financial consequences affiliated with different sales strategies. For example, when selling to a family member, friend or employee, the main goal will be to limit tax hits for both sides. In other scenarios, your primary concern might be what your client’s post-tax profit will be. Helping the client understand why these taxes exist and how to best handle them will expedite the sales process.

Be ready for financing: It is rare in the current economic environment for a business sale to take place without the seller providing some level of financing for the transaction. This means that your client will likely receive a minority of the sale price up front, and a more significant portion of the sale price over time in the form of a note from the buyer. Be sure that your client understands the timing and tax implications of this fact. Also make sure to discuss how the financing details will affect the client’s post-sale income plan.

Be prepared to help with the transition: Most business transactions will result in a transition period where the former owner helps advise the new buyer. You and your client should discuss the options for this time period early. How long with this period last? Will it be done over the phone or in person? Will there be an advisory fee written into the contract? Being prepared to answer these questions will help both the buyer and seller close a deal more quickly.

Screen buyers: While getting interest in a business is certainly exciting for a client, make sure the buyer is legitimate before spending too much time with details. Many sellers will come across candidates who have always wanted to buy a business but might not actually be equipped to do so. Or they may be interested in buying in the future, but may not be a viable buyer at this time. Ask questions like, “How long have you planned on buying a business?” “What do you expect your down payment to be?” and “How do you plan to finance the purchase?” That will help weed out those who aren’t serious or don’t have the means to complete a transaction. Using a business broker to help with the transaction can also take this burdensome task off of the owner’s plate.

Selling a business is no easy task, and there are certainly many other details to keep in mind during the process. But having a firm grasp on the sales process can help you provide the best advice for maximizing the final price. Your client will thank you for it in the end.

Mike Handelsman is group general manager for BizBuySell.com and BizQuest.com, the Internet's two largest and most heavily trafficked business-for-sale marketplaces.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access