The 5 Key Advisors You Need
When Selling Your Payroll Business
By Glenn Fallavollita, President of SellMorePayroll.com
- Word Count: 410
- Read Time: 1.6 Minutes
The sale of your payroll business can and will be emotional, stressful, and exciting all at the same time. However, to maximize your multiple, it will be a lot of work on your end.
Most Owners Will Only Experience The Process Of Selling Their Payroll Business Once In Their Life.
Based on my years of consulting with hundreds of business owners in the payroll industry, many of them are not ready for the ‘selling process’ and oftentimes leave money on the table at closing. That said, if you or someone you know is thinking about selling their payroll business, I’ve listed a few tips on who should be on your 'advisory team.'
The 5 Key Advisors...
Selling your business is not A DIY process; therefore, I recommend assembling a team of advisors, as they will be instrumental in getting the deal over the finish line at the maximum multiple.
- #1: Broker/M&A Advisor: Business brokers will connect you to a buyer; however, select a broker who knows the payroll industry, the buyers who are out there, what multiples are being paid, and the landmines to look out for with a LOI and purchase of sale agreement. Additionally, a solid business broker can help you get your financials organized, discuss valuation scenarios, finding/vetting potential buyers, advise you on deal structure and terms of the LOI/Purchase Agreement, etc.
- #2: Legal Advisor: Engage an attorney who regularly works on M&A deals and can assist you in the sale of your business and the proper wording of a LOI/Purchase of Sale Agreement.
- #3: Financial Advisor: Typically, business owners have the bulk of their net worth tied up in their company. And because of this, the sale marks a major turning point for them financially. Therefore, consider working with a wealth advisor before the sale.
- #4: CPA Or Tax Advisor: A CPA can help get your books ready and help analyze the tax implications of different deal structures and tax liability(s) under different scenarios, i.e., excluding gains from the sale (Section 1202), realizing all gains over time with an installment sale, asset versus stock purchase, and state tax implications.
- #5: Estate Planning Attorney: Your estate planning attorney can help ensure your post-close financial situation and goals are reflected in your current estate plan and trust structure.
As you go through this process, it’s important to put your emotions to the side and focus on who the right buyer would be for your business. Remember, it’s a multifaceted process that touches on your financial future, your employees, and your payroll/HCM clients.