Business How CPAs Can Help Business Owners During the Exit Planning Process

How CPAs Can Help Business Owners During the Exit Planning Process

Certified Public Accountants (CPAs) can provide critical financial and strategic support during the exit planning process for business owners. Below are ten-(10) ways CPAs can help business owners during the exit planning process according to Al Rhoney, CPA and CFO of Four-Star Holdings:


1. Financial Analysis and Valuation:

Although you do not have to be a CPA to value a business, CPAs are well qualified to conduct thorough valuations to determine the fair market value of the business, by incorporating financial statements, market conditions, and industry benchmarks. Moreover, CPAs can create detailed financial forecasts to present the business’s future profitability and growth potential to prospective buyers.


2. Tax Planning and Strategy:

CPAs can develop strategies to minimize tax liabilities associated with the sale, considering capital gains, income taxes, and other applicable taxes, and advise on the most tax-efficient deal structures (e.g., “asset sale” vs. “stock sale”) and implement strategies like “installment sales” to spread tax liabilities over time, in addition to ensuring that all aspects of the transaction comply with federal, state, and local tax laws.


3. Financial Record Preparation:

CPAs can help prepare and audit financial statements to ensure accuracy and transparency, which is crucial for buyer due diligence, and assist in organizing and presenting financial records, operational data, and other pertinent information to potential buyers.


4. Due Diligence Support:

CPAs can also prepare the business for due diligence by identifying and addressing potential financial red flags and discrepancies and support a seller during the buyer’s due diligence process, by providing necessary financial documents and explanations, for example.


5. Cash Flow and Working Capital Management:

CPAs analyze the business’s cash flow to ensure it remains healthy during the transition period and suggest adjustments to working capital that might be necessary as part of the sale terms.


6. Succession Planning:

CPAs can assist in creating financial plans for succession, ensuring the continuity of the business and its financial health post-exit, and, in the case of family-owned businesses, CPAs can advise on financial arrangements and tax implications related to transferring ownership within the family.


7. Retirement and Investment Planning:

CPAs can also work with business owners to help them plan for retirement, by considering the proceeds from the sale and how they will fund the owner’s post-exit life to ensure long-term financial security and growth.


8. Deal Negotiation Support:

CPAs can help evaluate offers from potential buyers, considering financial terms and implications, and provide input on financial aspects of the deal to strengthen the seller’s negotiation position.


9. Post-Sale Transition and Integration:

Like Certified Management Consultants,® CPAs can also assist in the financial transition to new ownership, ensuring a smooth handover of financial responsibilities and systems, and support the new owners in integrating the acquired business’s financial operations into their own systems.


10. Consulting and Advisory:

Lenders often rely on a CPA to provide a “Quality of Earning Report” (aka, a Q of E.) A Quality of Earnings Report is different from an audit, which provides “reason assurance” that a business’ financial statements are free from “material misrepresentations,” because it is tailored to the needs of the requestor and is usually focused on reassuring the lender of the soundness of the borrower’s ability to repay a loan.


CPAs can also offer general advice on improving business performance and profitability before the sale to enhance business value and help in developing strategic plans that align with the owner’s exit goals and the business’s future direction.

According to the Exit Planning Institute, 50% of businesses are forced to manage a business owner’s exit without a formal exit plan.

By leveraging their expertise in financial analysis, tax planning, and strategic consulting, Mr. Rhoney believes CPAs are an important professional at the exit planning table, because they can both ensure that the exit planning process is financially sound and aligned with the owner’s long-term goals and reassure future buyers about the soundness of the business.


About Al Rhoney, CPA:

Al Rhoney’s consulting career spans more than 25 years in virtually every business type. Although every business is unique in its organizational structure and culture, there are certain fundamental things that all well-run and profitable businesses need. During his career, he has found that client problems are normally related to those fundamental things … simple to identify but not easy to fix.
His specialty is looking at a “symptom” and helping to determine the root “problem” in order to correct it.


About Greater Prairie Business Consulting, Inc.:

Greater Prairie Business Consulting, Inc. is an award-winning, national consulting practice serving entrepreneurs, small to mid-sized privately held and family-owned businesses and middle market companies of any type with revenues between $1 million and $250 million. The firm helps small, mid-sized and middle market companies maximize their performance and exit.


About the Author

James J. Talerico, Jr. is an award-winning author, speaker, and a nationally recognized small to mid-sized (SMB) business expert.

With more than thirty- (30) years of diversified business experience, Jim has a solid track record and an A+ BBB rating helping thousands of business owners across the US and in Canada tackle tough business problems to improve the performance of their organizations.

His client success stories have been highlighted in the Wall St. JournalDallas Business JournalChicago Daily Herald, and on MSNBC’s Your Business. He was named “Texas Business Consulting CEO of the Year,” by CEO Today Magazine, identified as a “Top 10 Management Consulting Entrepreneur to Watch in 2023” by Entrepreneur Magazine, was listed among the “10 Most Visionary Companies to Watch in 2023” by Inc. Magazine, and has also been ranked among the “Top Small Business Consultants” followed on Twitter.

For more than half a decade, Jim was a regular guest on “The Price of Business,” a nationally syndicated radio program on Bloomberg Talk Radio and has also appeared as a subject matter expert on many FOX Radio interviews. He is a regular contributor to several blog sites and has frequently been quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, The Entrepreneur’s Review, and on, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.

Jim received a Gold “Stevie Award” for “Thought Leader of the Year,” a Gold “Stevie Award” for “Media Hero of the Year During Covid” and a Bronze “Stevie Award” for “Best Entrepreneur” in the Category of “Business and Professional Services” at the American Business Awards ® in New York City. The competition received more than 3,700 nominations and is the premier accolade for business excellence in the US honoring organizations of all sizes and industries. Jim also received an “Outstanding Leadership Award” at the Money 2.0 Conference for his contributions to the financial services industry.

Jim is the author of “8 Steps to Becoming an ETHICS FOCUSED ORGANIZATION,”™ a small business certification program that utilizes a unique eight – (8) step approach for strengthening ethics in any organization. The certification program won the Better Business Bureau’s “Torch Award for Ethics” for the North – Central Texas Region, the Better Business Bureau’s “International Torch Award for Ethics,” and a Gold “Stevie Award” for “Ethics in Sales” at the International Sales & Customer Service Stevie Awards ®. Participants who complete this certification program are eligible to receive eight – (8) continuing education units from the University of Texas’ Division of Enterprise Development.

He received his Certified Business Exit Consultant (CBEC) ® designation from The International Exit Planning Association (IEPA) to help entrepreneurs, small business owners, family businesses, and middle market companies maximize their business exit.

He is also a Certified Management Consultant (CMC) ® and an active member of the Institute of Management Consultants. The Certified Management Consultant ® mark is awarded by the Institute of Management Consultants USA (IMC USA) and represents evidence of the highest standards of consulting, a commitment to continuous development, and an adherence to the ethical canons of the profession. Less than 1% of all consultants in the world are Certified Management Consultants (CMC) ®

Jim has a B.A. in English & World Literature from Rutgers University, a B.S. in Business Administration from Thomas A. Edison University, and he is in the process of completing his M.B.A. from the University of Texas – Arlington.


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