Research Summary

  • Family Business

Selling a Business

Getting What You Need

Director of Research—Bernstein Wealth Management Group
Director—Bernstein Wealth Management Group
August 03, 2010
You Can Get Satisfaction

Sir Michael Jagger, better known as Mick, led The Rolling Stones in proclaiming that “You can’t always get what you want…but you just might find you get what you need.” This trade-off applies to all things in life, including investments, and it has special validity when selling a private business. Although an owner’s focus may be on getting a “magic number” for the business up front, he may find that other alternatives offer acceptable, or even superior, trade-offs.

We begin with the premise that business sales are typically complicated, and laden with emotional issues. The owner is selling his means of livelihood, and more—the configuration of his financial portfolio: He’ll have to make the transition from relying on business earnings to living off the pool of liquid investments generated by the sale. The good news is that sellers are not in the process alone, but generally represented by teams of advisors, usually quarterbacked by an investment banker and including a portfolio-management professional such as Bernstein (display below). The role of the investment manager is not to pass judgment on one or another term sheet, but to place each in the context of the seller’s overall financial objectives. This can be done at any point in the deal—but the earlier we help strategize the more value we can typically add.*

Transaction Planning: A Holistic Approach
*While we can’t structure transactions or provide tax or legal advice to prospective sellers and their advisors, we can help frame investment-management decisions and trade-offs.

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