Owning and operating a business on the international stage can be immensely rewarding, and it also presents its own challenges. One of the areas of opportunity and challenge for international businesses is selling the business. Sellers in these cases may face international implications that not every financial planner, accountant or advisor may have encountered.
We have that experience, and have been helping clients as they navigate this process internationally. We know first-hand the challenges that lie ahead for owners in the market to sell their business, and this article intends to shed light on some of these.
When looking at the buying and selling experience holistically, there are five important building blocks that lay the foundation for a confident and seamless transaction when you’re ready for a transition.
Find a ready buyer. Finding a qualified buyer is the first step in selling any business. But in the international sphere, your pool of potential buyers gets smaller as there are fewer businesspeople who understand how to operate on an international scale. To find a ready buyer, start early and network among your contacts who may be key employees, suppliers, customers, competition or work in related industries or even private equity firms. Also, consider tapping your children and relatives who may be interested in taking over the reins. Additionally, it may be helpful to consider hiring an investment banker or a business broker with experience in your industry and geographical area.
Get a proper valuation. Getting a proper and formal valuation in an imperative step for both the seller and the buyer. A valuation also plays a role in your taxes. Find a valuation firm that has the relevant expertise, meaning they have experience in your industry and the countries you operate in. The firm is then able to assess the strengths and risks of the entity’s international sales and operations.
Organize taxes. Tax planning is challenging as it is, but it becomes an exponentially more complicated task for businesses that have assets and operations abroad. These may be subject to varying tax laws in different countries, only adding to the complexity. It’s also important to remember that selling your company abroad will have an impact on your taxes back in the U.S. It could be helpful to meet with an accounting firm that has an international reach. While this process can add time to the selling process, a seasoned accountant may offer indispensable guidance through this process.
Get comfortable with letting go. For some business owners, this step is the most difficult. They have been preparing for months — finding a buyer, getting a valuation and becoming an expert in international tax codes — and suddenly they’re faced with an immense feeling of loss when it is time to say goodbye. When deciding to sell, prepare for the sadness associated with leaving your business, your employees and, oftentimes, your life’s work behind. Coming to terms early on will make this transition easier.
Find a trusted advisor. Some of the most successful entrepreneurs surround themselves with the people who can help them build their businesses into successful enterprises. And just as in building that business, it’s equally important to retain financial and legal partners who not only understand international transactions, but also have the scope of skills, breadth of knowledge and depth of experience to help you achieve your goals. Pinnacle Financial Advisors has been helping clients with international businesses and interests for more than 15 years.
Getting your international business ready to sell is an enormous accomplishment, one that requires time, energy and ample preparation. By considering these five steps, a business owner can embark on this journey with more confidence and ease.
Last month, we were part of a Global Chamber® globinar on this topic, and I encourage you to review the wrap-up blog post that includes additional information at www.globalchamber.org.
Lennard van der Feltz, CFP®, MSM, MBA is a founding partner of Tempe-based Pinnacle Financial Advisors, which assists individuals, families and businesses with financial planning and wealth management. He is a Registered Representative offering Securities through UNITED PLANNERS FINANCIAL SERVICES, Member: FINRA, SIPC. Advisory Services offered through SEROS FINANCIAL, LLC. Pinnacle Financial Advisors, Seros Financial, and United Planners are independent companies.