Assisting a Business Owner to Ensure a Successful Sale of the Enterprise

A private preschool and kindergarten operator was preparing to sell the business to a new owner.

The components of the sale included both the tangible and intangible assets of the enterprise. In order to prepare for a successful sale, Lagerquist Accounting & Advisory assisted the business owner with proactive steps toward the purchase and sale process.

Lagerquist Accounting & Advisory also served as a sounding board and advisor to the business owner, who was working through this process for the first time. The firm helped the client prepare and guided them through many of the intricacies of this process, both pre- and post-sale.

The following are some of the activities which Lagerquist Accounting & Advisory assisted with pre-sale:

  • Helping the client understand the value selling the business vs. just closing the entity down
  • Providing the potential buyer, once identified, with all of the historical accounting data on the business so that they could assess whether they could afford to buy it at the price that had been discussed.
  • Helping the client understand the legal and strategic issues that her attorney was raising and needed to be addressed during the agreement review and negotiation
  • Identifying and providing additional financial information that needed to be included in the agreement
  • One essential step was to inventory the physical assets of the business, establishing a value on those assets, and distinguishing assets that belonged to another entity..
  • Calculating the value of Paid Time Off (PTO) that transitioning employees were entitled to and which needed to be planned for as part of the transition.

In addition, many post-sale activities were performed to ensure a smooth transition, including:

  • Determining how to accurately prepare and report revenue data necessary to ensure compliance with terms of the purchase and sale agreement.
  • Assisting the buyer and seller to sort out revenues that were collected in which a portion of funds may have required a disbursement from one to the other.

Lagerquist Accounting & Advisory was also integral to helping the business owner identify, realize and secure a very strong enterprise value for the business throughout the purchase and sale negotiation.

In addition, most of the value of the sale was assigned to the intangible assets, which are taxed at capital gains tax rates (and that are more favorable than ordinary tax rates).

In summation, the deal successfully took place and both buyer and seller were highly satisfied with the efficiency and effectiveness of the transaction process.

The client was extremely pleased with the value of having an experienced Outsourced CFO, who focused on the bigger picture financial strategy to save money and time while improving reporting and overall profitability.