(Scott Lauray and Rodney A. Cook)
A Roadmap for Business Owners
Selling a business is one of the most significant decisions an entrepreneur can make. The process is complex and requires careful planning to maximize value and achieve a successful outcome. By understanding the key stages involved, business owners can navigate this journey with confidence and clarity. Below, we outline these stages, offering insights from Scott Lauray, Principal at Northwest Business Group, and Rodney Cook, Partner and Director of Financial Planning at Rosell Wealth Management. These insights are particularly relevant for business owners in Central Oregon, where industries like outdoor recreation, craft brewing, and technology are thriving. Together, they provide complementary perspectives as an M&A advisor and a financial planner.
1. Preparation: Setting the Foundation
Scott Lauray: Preparation is the cornerstone of a successful sale. For example, a Central Oregon craft brewery recently enhanced its valuation by addressing outdated financial records and investing in equipment upgrades before going to market. This involves assessing the business’s readiness for market, addressing potential obstacles, organizing financial, operational, and legal documentation, and conducting a professional valuation to determine market value. A thorough preparation process ensures smoother negotiations and increases the likelihood of achieving a strong sale price.
Rodney Cook: Knowing your business’s approximate selling price (The Freedom Number) is crucial. With 99.1% of Oregon businesses generating under $10 million annually (Oregon Economic Review, 2023), tailored exit strategies are essential. A Certified Exit Planning Advisor (CEPA), can help align personal, business, and financial goals while implementing tax-efficient strategies like trusts and donor-advised funds to maximize value and secure your legacy.
2. Marketing and Buyer Identification
Scott Lauray: With the groundwork laid, the next step is marketing the business to potential buyers while maintaining confidentiality. A Confidential Information Memorandum (CIM) is created to present key business information. Identifying and qualifying potential buyers is crucial, and engaging intermediaries like business brokers or M&A advisors can streamline this process, particularly for niche industries like those prominent in Central Oregon. At this stage, only preliminary information is shared with potential buyers and with an NDA in place.
Rodney Cook: A Financial Planner’s role is to ensure the sale aligns with your goals. Central Oregon’s thriving industries, like craft brewing, contribute significantly to the local economy. By understanding industry value drivers and stress-testing financial scenarios, we help ensure the sale supports your lifestyle and long-term objectives.
3. Preliminary Discussions and Indications of Interest
Scott Lauray: After initial marketing, interested buyers sign a Non-Disclosure Agreement (NDA) and engage in preliminary discussions. Serious buyers will provide an Indication of Interest (IOI), outlining their willingness to move forward.
Rodney Cook: At this stage, evaluating deal structures like earn-outs or equity rollovers to ensure they integrate with your financial plan is important. Together, with an advisor you should craft terms that meet your financial needs and support your post-sale vision, whether that includes retirement, new ventures, or charitable goals.
4. The Letter of Intent (LOI)
Scott Lauray: The LOI formalizes the buyer’s intent and outlines key terms such as purchase price, deal structure, and contingencies. While most terms are non-binding, the exclusivity clause ensures the buyer can conduct due diligence without interference from other buyers.
Rodney Cook: The LOI is a key moment to review financial implications. You and your advisor should assess payment structures and tax impacts to help ensure the terms support both your immediate and future financial stability.
5. Due Diligence
Scott Lauray: Buyers conduct an in-depth review of the business, examining financial records, contracts, and legal compliance. Transparency and preparedness are essential to maintaining buyer confidence.
Rodney Cook: From a financial planning perspective, due diligence works to ensure your financial goals are protected. Seasonal industries, like hospitality, often face revenue fluctuations that require careful analysis (Oregon Employment Department, 2023). A planner will help you address these challenges, aligning deal terms with your financial objectives and minimizing tax impacts to preserve long-term value.
6. Negotiation and Definitive Agreement
Scott Lauray: This stage involves finalizing the deal terms and drafting binding agreements like the Purchase and Sale Agreement (PSA). Legal and financial advisors play a pivotal role in ensuring fairness and enforceability.
Rodney Cook: An advisor’s role is to align deal terms with your objectives. Refine elements like non-compete clauses and consulting agreements to preserve wealth while leveraging Oregon’s incentives for traded-sector businesses to maximize value.
7. Closing
Scott Lauray: Closing marks the official transfer of ownership. Funds are exchanged, documents are signed, and operational control is handed over to the buyer.
Rodney Cook: Transitioning your business is both a financial and emotional milestone. I help ensure your post-sale plan addresses liquidity, income generation, and philanthropic goals, creating a seamless transition into your next chapter.
8. Post-Closing Transition
Scott Lauray: After closing, collaboration between the buyer and seller ensures a smooth transition. This may include training, introductions, and completing post-closing obligations. In Central Oregon’s close-knit business communities, maintaining relationships with key clients and suppliers is particularly vital.
Rodney Cook: Post-closing is a time for adjustment. With your advisor you should refine your financial plan to support your evolving goals, from charitable initiatives to personal passions.
Selling a business is more than a transaction — it’s a journey that requires strategic planning, collaboration, and expert guidance. By understanding the stages of the sale process, business owners can approach this milestone with confidence, ensuring they achieve their financial and personal goals while preserving the legacy of their business.
If you’re a business owner contemplating a sale, now is the time to start planning. Central Oregon’s vibrant business ecosystem offers unique opportunities for growth and transition. Reach out to Scott Lauray at Northwest Business Group or Rodney Cook at Rosell Wealth Management to discuss your unique situation and craft a roadmap for success. For additional resources, visit BizBuySell or the Exit Planning Institute for expert guidance on business transitions.
Securities offered through ValMark Securities, Inc. Member FINRA, SIPC. Investment Advisory Services offered through ValMark Advisers, Inc., a SEC-registered investment advisor. Rosell Wealth Management is a separate entity from ValMark Securities, Inc. and ValMark Advisers, Inc. Scott Lauray and Northwest Business Group are not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc.
Rodney A. Cook CFP is the Director of Financial Planning at Rosell Wealth Management in Bend. RosellWealthManagement.com. Investment advisory services offered through Valmark Advisers, Inc. an SEC Registered Investment Advisor. Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste 300 Akron, Ohio 44333-2431. (800) 765-5201. Rosell Wealth Management is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.“Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP, CERTIFIED FINANCIAL PLANNER, and CFP (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”
