Tip:
Highlight text to annotate it
X
Aaron Hall: I'm Aaron Hall, business attorney in Minneapolis.
Aaron Hall: Cliff, how much prior to the sale of business should a business owner start
working on preparing for the sale? Cliff Allen: How soon is the question, so
the answer is from the day they incorporate. There is—The most important thing they can
do when they're putting a business together and figuring out what their goals are, is
to build for a sale because it doesn't matter whether they decide to sell at the end or
not. But the business will be built better, built to last, and built to grow value.
Aaron Hall: What about for a professional services company or a services company that
is based on the personality of the founder? What advice do you have for them preparing
for a sale? Because obviously if the founder's no longer involved, you lose that personality.
Cliff Allen: So in that situation, the founder needs to plan well in advance of his/her eventual
transition. The recommendation I make is to make the company strong enough so they can
bring in junior partners, if you will, who can be vetted to make sure they're the right
kind of people to take on the business, because there are professionals who have no interest
in running a business, as you all well know. In a law firm, there are only a few partners
that say, "I'll take that burden on and manage the business itself." So whether it's a professional
service firm like CPA, a small CPA firm, unless they just want to close the doors, then it's
important to bring in successors who can have a buy-in opportunity over a period of time.
Aaron Hall: Not every business owner prepares in advance. Sometimes they're incapacitated
or they die. What have you done in those types of circumstances to come in and help the business?
Cliff Allen: Well if I'm engaged with that business in advance, we are on a path. We
are on a road to improving value whatever years. So I've got a pretty good sense of
what's going on in the business, what the management team looks like, what their skills
are, what their weaknesses may be. And it's very easy for me to step into that role temporarily—I'm
not looking for a full-time job—but temporarily to help the business moving forward. To stabilize
customer relationships, employee relationships, vendors, and take care of that part of the
estate. So the professional advisors can sort out what has to happen.
Aaron Hall: What happens if some business owner dies unexpectedly, and the widow is
now left with this business? Is that a scenario where you can help?
Cliff Allen: I can help, simply by stepping into the role. I've been owner and CEO and
COO of businesses, small to medium sized companies, so I'm very comfortable running a business
for a short period of time, which may be 6 months or a year. But it's not a long term
play. And part of my role would be to find out who inside is capable, and if we have
to hire someone to run it.