#advisor coordination

[investingguidebook]

Six Categories of Advisor to Coordinate Before a Business Exit

A business owner approaching a sale typically interacts with more advisor categories than the average financial planning conversation requires. The categories are different from each other in important ways, and the coordination among them often determines whether the post-sale picture looks the way the seller wanted it to look. This is an educational guide to the six categories most often involved, what each typically contributes, and what questions to ask when assembling the team.

This is not advice about which advisors any specific seller should hire or in what order. Every transaction has its own specifics and the right team composition varies. The list below is a starting point for understanding the categories.

1. Transaction counsel (M&A attorney)

Transaction counsel handles the legal mechanics of the sale: structuring the deal, drafting and negotiating the purchase agreement, managing due diligence, coordinating with the buyer's counsel, and closing the transaction. The role is typically the most active during the formal sale process and tends to be the first advisor engaged once a sale is imminent.

Topics typically raised with transaction counsel:

Deal structure (asset sale vs stock sale, with input from tax counsel)

Purchase agreement provisions (representations and warranties, indemnification, escrow, working capital adjustments)

Closing conditions and timeline

Coordination with the buyer's counsel

Post-closing dispute prevention

Questions worth asking when evaluating transaction counsel:

How many transactions of similar size and structure have they handled in the past three years?

Who else on their team will be involved?

How do they typically coordinate with tax counsel and the wealth advisor?

What is their fee structure for a transaction of this scope?

2. Tax counsel or CPA with M&A experience

Tax counsel or a CPA with M&A experience analyzes the federal, state, and local tax consequences of different deal structures and helps optimize the after-tax outcome for the seller. The work often runs in parallel with transaction counsel and benefits from being engaged early enough to inform structural decisions.

Topics typically raised:

Federal and state tax treatment of different deal structures

Application of Internal Revenue Code provisions relevant to the transaction (Section 1202 QSBS, Section 338(h)(10), Section 280G, others)

Treatment of earnouts and seller's note carry-backs

State tax residency considerations

Estimated tax planning for the year of sale

Questions worth asking:

How much of their practice is M&A tax vs other tax work?

How do they coordinate with the wealth advisor on post-sale tax planning?

What is their typical engagement structure (fixed fee, hourly, or hybrid)?

The AICPA professional resources cover the credentials and standards relevant to CPAs. The IRS general resources are the underlying authority for federal tax topics.

3. Wealth advisor

The wealth advisor (typically a financial planner, wealth manager, or family office representative) helps the seller plan for the post-sale financial picture. Where transaction counsel and tax counsel are heavily focused on the deal itself, the wealth advisor's focus extends across the seller's entire financial situation, before, during, and after the transaction.

Topics typically raised:

Cash management for sale proceeds during the transition window

Investment policy and asset allocation for invested proceeds

Coordination with longer-term planning (retirement income, philanthropy, family goals)

Liquidity needs in the post-sale period

Tax-efficient distribution planning over multiple years

Questions worth asking when evaluating wealth advisors:

Are they fee-only or commission-based?

Are they a fiduciary at all times or only on certain accounts?

How often have they worked with clients experiencing a sudden liquidity event of similar scale?

How do they coordinate with the other advisor categories?

The SEC investor education portal covers the regulatory framework for investment advisors. The FINRA BrokerCheck tool is the standard way to verify a financial professional's credentials and disciplinary history. The NAPFA member directory lists fee-only advisors. Educational materials on what to look for when evaluating wealth advisors during business sale planning are available at https://capivise.com.

4. Employment counsel

Employment counsel handles the human-side legal matters that accompany a business sale: employment agreement amendments, retention agreements, restrictive covenants, severance, and the broader employee transition planning. The role is sometimes overlooked when transaction counsel takes responsibility for these matters, but employment counsel typically brings deeper expertise on the employment-law specifics.

Topics typically raised:

Management retention agreement structure and provisions

Treatment of existing employment agreements at closing

Non-compete and non-solicitation enforceability in relevant jurisdictions

Severance arrangements for non-retained employees

Compliance with notification requirements (WARN Act for larger transactions, state equivalents for smaller)

For a more focused educational overview of management retention specifically, this educational guide on management retention agreements covers the topic in depth.

5. Estate planning attorney

For sellers whose sale will materially change their financial picture, an estate planning attorney often becomes relevant either pre-sale (to take advantage of planning opportunities before liquidity arrives) or post-sale (to update existing estate planning documents to reflect the new circumstances).

Topics typically raised:

Pre-sale gifting opportunities (transferring some equity before the sale to lower the taxable estate)

Trust structures appropriate for sale proceeds

Charitable planning structures (donor-advised funds, charitable remainder trusts, private foundations)

Updates to existing wills, trusts, and powers of attorney to reflect changed circumstances

Generation-skipping considerations for larger estates

The interaction between pre-sale estate planning and post-sale wealth planning is often where coordination with the wealth advisor and tax counsel pays off. Decisions made in one area constrain options in the others.

6. Insurance specialist

For larger transactions or transactions with specific risk profiles, an insurance specialist may be relevant. Categories of insurance that can become part of the sale conversation:

Representations and warranties insurance (covers buyer claims against the seller for breach of certain representations)

Tax liability insurance (covers specific tax positions that may be challenged post-closing)

Key-person life insurance (relevant when seller financing or earnouts depend on continued seller involvement)

Director and officer liability insurance for the seller's pre-sale activities

The insurance side of a business sale is highly fact-specific and not relevant in every transaction, but where it is relevant, it benefits from specialist input rather than from the seller's general insurance broker.

The coordination problem

Each of the six categories has a defined contribution. The harder problem is coordinating them so that decisions get made with input from all the relevant categories, not just the one in the room when the question comes up.

Patterns that tend to support good coordination:

A designated quarterback. One advisor (often transaction counsel, sometimes the wealth advisor) takes responsibility for ensuring cross-advisor questions are routed appropriately. Without a quarterback, decisions tend to fragment.

Regular all-hands check-ins. Weekly or biweekly conversations with the relevant advisors keep everyone aware of where the transaction stands. Email threads alone are usually not enough.

Shared document workspace. A common location where transaction documents, analyses, and notes live. Avoids version-control problems and missed information.

Defined escalation path. When cross-advisor disagreements arise (and they do), a defined process for resolving them is faster than ad hoc negotiation each time.

The cost of coordination overhead is real but typically smaller than the cost of decisions made without appropriate cross-advisor input. The longer educational overview on coordinating advisors during a business sale is available as part of the broader educational materials on business sale planning.

Topics to raise at the team-assembly stage

Once the categories are identified and individual advisors are being evaluated, several topics benefit from raising at the team-assembly stage:

How do the advisors plan to coordinate with each other?

What does the fee structure look like in aggregate (not just per advisor)?

Who is the primary point of contact on the seller's side?

What does the realistic timeline look like for a transaction of this scope?

What are the major risk categories that have come up in similar prior transactions?

These conversations often happen informally if at all. Making them explicit upfront reduces the chance of surprises later.

A few external references

IRS general taxpayer resources

SEC investor education

FINRA BrokerCheck

AICPA professional resources

NAPFA fee-only advisor directory

What this educational guide is and is not

This is an educational overview of advisor categories that often appear in business sale planning. It is not advice on which specific advisors any seller should hire, what fee arrangements to negotiate, or how to structure any specific transaction. Every business sale is different and the right team composition varies. The categories above are a starting point for the conversations that ultimately produce the team.

[investingguidebook]

Six LOI-Stage Questions to Raise With Your Tax Advisor

The tax advisor is sometimes brought into a business sale process later than the lawyer and the financial advisor, often because owners think of taxes as a closing-time topic rather than a deal-structuring one. By the time the LOI is signed, however, many of the most consequential tax-planning decisions are already constrained by the structure committed to in the document.

This article is an educational walkthrough of six questions worth raising with your tax advisor at the LOI stage of a private business sale. It does not provide tax, legal, accounting, or financial advice; specific decisions should be reviewed with appropriately licensed professionals familiar with the deal.

Photo by Alexey Demidov on Pexels

1. Asset sale or stock sale?

The single most consequential structural decision in many private-company sales is whether the transaction is structured as an asset sale or a stock sale (or a merger that achieves equivalent treatment). The LOI typically commits to one structure or the other.

Topics worth raising with the tax advisor:

What are the tax consequences of an asset sale vs a stock sale for the specific entity structure (C corporation, S corporation, LLC, partnership)?

Is the proposed structure favorable or unfavorable for the seller's tax situation?

Are there alternative structures (F reorganization, taxable Section 338(h)(10) election) that produce different consequences?

If the proposed structure is unfavorable, is renegotiating to a different structure feasible at this stage?

The Internal Revenue Service guidance provides general reference material on the federal tax treatment of business sales, but the specific application to a given deal requires a qualified tax advisor's review.

2. How is the purchase price allocated across asset categories?

In an asset sale, the buyer and seller allocate the purchase price across categories of assets (inventory, accounts receivable, equipment, real property, goodwill, intangibles, non-compete agreements). The allocation has different tax consequences for each side.

Topics to clarify:

How is the allocation determined? (Negotiated, formula-driven, set by appraisal.)

What allocation does the LOI commit to, if any?

What allocation is most favorable for the seller's tax situation?

How does the allocation interact with Section 1060 reporting requirements?

Are there allocation strategies that the LOI's language allows for or forecloses?

The allocation is one of the most consequential tax topics in an asset sale and is sometimes negotiated separately from the headline purchase price.

3. How will contingent payment components be taxed?

If the deal includes earnouts, escrows, or holdbacks, each has its own tax treatment with respect to timing of income recognition.

Topics to clarify:

How is the earnout taxed? (Installment method, deferred reporting, ordinary income vs capital gain treatment.)

How are escrow funds taxed? (At closing, when released, depending on contingency.)

How are holdback amounts taxed?

Are there interest imputation rules that apply to delayed payments?

How does the tax treatment of each component interact with the seller's overall tax planning?

These questions are particularly important because the timing of income recognition affects the seller's tax liability in each year. A poorly understood earnout can produce surprises three or four years post-closing.

4. Are there state and local tax considerations the LOI affects?

State and local tax exposure can be significant in a private business sale, particularly for multi-state operations.

Topics to clarify:

What is the seller's state tax exposure under the proposed structure?

Are there state-level elections that need to be made before closing? (Sales tax, transfer tax, withholding obligations.)

Does the seller's state of residence affect the after-tax outcome?

Are there state-level audit risks tied to the deal structure?

How do multi-state operations affect the tax planning?

State considerations are often less visible than federal in the LOI discussion but can affect the after-tax outcome materially.

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5. Does the LOI affect any tax-advantaged structures the seller already has?

Owners with Section 1202 qualified small business stock, Section 1045 rollover opportunities, qualified opportunity zone investments, or other tax-advantaged structures need to confirm that the LOI's structure preserves the benefits.

Topics to clarify:

Does the proposed structure preserve Section 1202 eligibility, if applicable?

Are there timing constraints on Section 1045 rollovers that interact with the closing date?

Do existing qualified opportunity zone investments need to be considered?

Are there estate planning structures (defective grantor trusts, GRATs, family LLCs) that the deal interacts with?

Are there charitable planning structures (CRT, CLT, donor-advised funds) that should be set up before signing the LOI?

These structures often have timing and structural requirements that constrain what the LOI can commit to without inadvertently disqualifying the seller from the benefit.

6. What tax-planning steps should happen before signing vs after?

Some tax-planning steps need to happen before the LOI is signed; others should happen during the exclusivity period; others happen at or after closing.

Topics to clarify:

Are there charitable contributions that should happen before signing?

Are there entity restructurings (F reorganizations, drop-down transactions, internal reorganizations) that should happen before signing?

Should the seller change state of residence before signing?

Should specific assets be carved out or carved in before signing?

What is the cadence of tax-planning steps across the exclusivity period?

The sequencing matters because some steps cannot be done effectively after the LOI is signed (or in some cases, after the deal is publicly known). The tax advisor's view on what should happen first is the right input at this stage.

The role of broader advisor coordination

The tax advisor's input at the LOI stage interacts with the lawyer's review of the document language and the financial advisor's view of the after-close picture. The lawyer sees the structure as a legal document; the tax advisor sees the same structure as a set of tax consequences; the financial advisor sees the same structure as a stream of after-tax proceeds.

Coordinating across the three is the pattern that produces an LOI the seller can sign with confidence. The team at Capivise is one educational resource where owners can review how advisor coordination typically works in an exit context.

Common questions sellers ask about the tax review

A few questions that consistently come up when sellers first engage their tax advisor at the LOI stage:

Is it too early to involve the tax advisor? No. The LOI stage is the right time. Decisions made in the LOI are difficult to unwind in the definitive agreement, and many tax-planning steps have lead times that make starting later impractical.

Will the tax review delay the LOI signing? A focused tax review can be done in a few business days for most deals. The delay is usually small relative to the benefit of getting the structural decisions right.

Can the buyer's structural preferences be renegotiated? Sometimes. The buyer may prefer a stock sale and the seller may prefer an asset sale (or vice versa). The structural choice is often a negotiating point at the LOI stage; once committed, harder to revisit.

What if the tax advisor surfaces a problem the lawyer hasn't flagged? This is exactly why both perspectives are needed. The tax advisor's view on structure is different from the lawyer's, and a problem flagged by one is often invisible to the other.

Educational resources worth reviewing

A few publicly available references:

The Internal Revenue Service for general federal tax guidance.

The American Bar Association's Business Law Section for accessible M&A practice material.

The SEC's investor education hub for general principles of securities transactions.

The Capivise blog for educational articles on advisor coordination across an exit.

These resources are educational and do not replace conversations with a qualified tax advisor familiar with the specific deal.

The longer read on the LOI conversation

This article focuses on the tax advisor's role specifically. The broader conversation about the LOI's full set of provisions, the role of counsel and the financial advisor, and the patterns of advisor coordination across the document sits in a longer guide on the Letter of Intent in a business sale and the topics to clarify with advisors before signing.

The recurring pattern: the tax advisor's input is most useful before the LOI is signed, not after. By the time the document is signed, many of the structural decisions are constrained. Topics worth raising with the tax advisor at this stage are the ones that determine the after-tax outcome of the deal.

[investingguidebook]

Conditions to Closing in a Business Sale LOI: Topics to Clarify

The conditions-to-closing section of a letter of intent (LOI) is often glossed over in early review because the language tends to be high-level and standard-looking. The standard-looking nature is what makes it risky. Each condition listed in the LOI becomes an exit lane for the buyer if the condition is not satisfied; the breadth of the list and the precision of the definitions together determine how much exposure the seller has during the exclusivity period.

This article is an educational overview of the conditions-to-closing topics worth raising with your transaction counsel before signing. It does not provide legal, tax, accounting, or financial advice; specific decisions should be reviewed with appropriately licensed professionals familiar with the deal.

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What the conditions section typically covers

A typical conditions-to-closing list in a private-company LOI will include some or all of:

Satisfactory completion of due diligence by the buyer.

Absence of material adverse change in the seller's business between signing and closing.

Receipt of any required regulatory approvals.

Receipt of necessary third-party consents (landlords, key customers, lenders).

Buyer financing (if the deal is financed by external sources).

Receipt of audited or reviewed financial statements covering the relevant period.

Satisfactory employment arrangements with key employees.

Receipt of legal opinions on specific topics.

No pending litigation that affects the transaction.

Each item on the list looks reasonable in isolation. The question is how each is defined and how broad the buyer's discretion is in determining whether the condition is satisfied.

Topics to clarify about each condition with counsel

For each condition listed, the educational topics worth raising:

Who decides whether the condition is satisfied? A buyer-friendly version gives the buyer broad discretion ("the buyer's satisfaction in its sole discretion"). A more balanced version uses a reasonableness standard ("the buyer's reasonable satisfaction"). The standard meaningfully affects the seller's exposure.

What specifically is being conditioned? "Satisfactory completion of due diligence" is the broadest possible formulation. A tighter version might list specific diligence categories or specific findings that would trigger walk-away. The breadth of the language matters.

Is the condition mutual or one-sided? Most conditions in an LOI are buyer-side; a few may be mutual (regulatory approval) or seller-side (receipt of board approval). Identifying which apply to which side clarifies the symmetry of the deal.

Is there a cure period? Some conditions include a window during which the seller can address the issue before the buyer can walk. Others do not. The cure period structure affects the practical importance of any condition.

Is the condition objective or subjective? "Receipt of audited financial statements" is objective (the statements exist or they do not). "Absence of material adverse change" is subjective (reasonable people can disagree). Subjective conditions give the buyer more flexibility and the seller less certainty.

Specific conditions worth a closer read

A few conditions that consistently warrant attention:

Material adverse change. The MAC clause is one of the most heavily negotiated provisions in private M&A. The LOI may sketch a definition that becomes the negotiating baseline for the definitive agreement. Topics to clarify with counsel include what specifically triggers a MAC (revenue decline, customer loss, regulatory change), what is excluded (industry-wide events, macroeconomic conditions, COVID-style disruptions), and what the threshold of materiality is.

Buyer financing. If the buyer is relying on third-party financing, the LOI may make the deal contingent on the financing's availability. Topics to clarify: how firm is the buyer's financing commitment, what specific financing is contemplated, and what happens if the financing terms change.

Third-party consents. Customer contracts, landlord agreements, and lender consents may be required to close. The LOI may make the deal contingent on receiving these. Topics to clarify: who is responsible for obtaining each consent, what is the timeline, and what happens if a consent is denied or delayed.

Key employee retention. The LOI may make the deal contingent on key employees signing new employment or non-compete agreements. Topics to clarify: which employees are "key," what specific terms must be agreed, and what happens if an employee declines.

Due diligence completion. "Satisfactory completion of due diligence" is the broadest condition. Topics to clarify: what specific diligence the buyer plans to conduct, how the satisfaction standard is determined, and what happens if diligence surfaces issues.

Topics to clarify with the tax advisor

Even though conditions to closing are primarily a legal topic, the tax advisor has views on a few:

Tax-related conditions. Some LOIs make the deal contingent on receipt of specific tax opinions or rulings. The tax advisor's view on whether these conditions are appropriate matters.

Conditions affecting the deal structure. If a condition requires the parties to change the deal structure (for example, restructuring as an asset sale instead of a stock sale), the tax consequences may shift. The tax advisor can flag the implications.

Conditions affecting purchase price allocation. If conditions tied to specific asset categories (real property, intellectual property, inventory) might shift the allocation, the tax consequences may change.

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Topics to clarify with the financial advisor

The financial advisor's view on conditions to closing is primarily about timing:

Closing date certainty. Each condition introduces uncertainty about when (or whether) closing will occur. The financial advisor can help the seller think through how the timing uncertainty affects liquidity planning, reinvestment scenarios, and the after-close picture.

Earnout interaction. If the deal includes an earnout, the closing date and the earnout measurement period interact. Conditions that push closing later may shift the earnout window in ways that affect the seller's expected proceeds.

Escrow and holdback timing. Conditions tied to specific events (regulatory approval, third-party consents) may affect when escrow or holdback periods begin running. The financial advisor's view on the implications matters.

Common patterns worth understanding

A few patterns that show up consistently in conditions-to-closing language:

Buyer "outs" can be one-sided. Many LOIs include conditions that give the buyer the right to walk without giving the seller a corresponding right. Symmetry is a negotiating point.

Subjective conditions favor the side that controls them. A condition tied to the buyer's "satisfaction" gives the buyer significant flexibility. Renegotiating to "reasonable satisfaction" or to objective criteria is often possible at the LOI stage and harder later.

Cure periods matter more than the condition's existence. A condition with a 30-day cure period and a defined remediation process is much less risky than the same condition with no cure period.

Specificity reduces disputes. A condition listing specific items the buyer will review is much less prone to dispute than a generic "satisfactory diligence" condition. Specificity is a seller-side ask that counsel can help negotiate.

The role of advisor coordination

Each of the topics above sits at the intersection of legal, tax, and financial considerations. Counsel handles the language; the tax advisor flags structural implications; the financial advisor flags timing and liquidity implications. Coordinating across the three before signing the LOI is the pattern that produces a conditions section the seller can live with.

An advisor coordination resource like Capivise is one place where owners can review the categories of advisor specialty involved in a business sale and the types of questions raised in each.

Educational resources worth reviewing

A few publicly available references:

The American Bar Association's Business Law Section for accessible M&A practice material.

The SEC's investor education hub for general principles of securities transactions.

The Federal Reserve Bank of St. Louis economic research portal for macroeconomic context.

The Capivise homepage for educational material on exit-related advisor coordination.

These resources are educational and do not replace conversations with licensed counsel or qualified advisors.

The longer read on the LOI as a whole

This article focuses on the conditions-to-closing section. The broader conversation about the LOI as a stage in the transaction, the role of advisor coordination, and the topics worth raising with each advisor specialty before signing sits in a longer guide on the Letter of Intent in a business sale and the topics to clarify with advisors before signing.

The conditions section often gets less attention than the price and structure sections at the LOI stage, and pays for it later. Each condition is a potential exit lane for the buyer. Understanding the breadth and definition of each, and coordinating with counsel and the broader advisor team before signing, is the discipline that produces a closing-conditions section the seller is willing to commit to.

[investingguidebook]

How to Coordinate Tax, Legal, and Accounting Advisors on the Escrow Provisions of a Business Sale

The escrow provisions of a business sale agreement sit at the intersection of legal language, tax treatment, and accounting mechanics. Coordinating across the three advisor disciplines is one of the higher-leverage tasks in the deal preparation, and one of the most common places where coordination breaks down.

This is an educational step-by-step on how to run that coordination in practice. It does not provide tax, legal, accounting, or financial advice. Decisions about your specific transaction should be reviewed with appropriately licensed professionals familiar with your situation.

Step 1: Map the escrow terms to the three disciplines

Before the coordination meeting, build a one-page map showing which provisions of the escrow are primarily legal, primarily tax, and primarily accounting:

Primarily legal:

Indemnification language and the definition of "loss"

Survival periods for representations and warranties

The claim and dispute process

Recourse structure (sole versus partial)

The role of representation and warranty insurance, if any

Primarily tax:

Treatment of the escrowed funds under IRS installment-sale rules, if applicable

Tax character of interest earned during the hold period

Timing of income recognition for the seller

State and local tax implications

Tax treatment of the eventual release

Primarily accounting:

Interaction with the working capital adjustment

Treatment of any specific contingent liabilities reflected in the escrow

Documentation requirements during the hold period

Mechanics of the eventual release calculation

The map is not perfect - every column has overlap with the other two - but it helps each advisor see where their work overlaps with the other disciplines.

Step 2: Run the initial review with each advisor separately

Before the coordinated session, give each advisor time to review the documents with their discipline-specific lens. The instructions are different per advisor:

Transaction counsel: Review the indemnification and escrow language for completeness and clarity. Flag any provisions that diverge from standard practice in recent comparable deals. Identify specific terms where the buyer's draft puts the seller at a disadvantage.

Tax advisor: Model the tax treatment of the escrowed funds under the current structure. Identify any alternative structures that might produce a better after-tax outcome. Flag any provisions where the tax treatment is unclear.

Accounting team: Trace the interaction between the escrow, the working capital adjustment, and any specific contingent liabilities. Identify any provisions where the documentation requirements are heavier than they need to be. Flag any mismatches between the deal accounting and the escrow mechanics.

Give each advisor a week or so to do this work. Then convene.

Step 3: Run the coordinated session

The coordinated session is the highest-leverage hour or two of the deal preparation. The goal is for each advisor to react to the others' input and surface the cross-discipline issues that one-on-one reviews would miss.

Structure for the session:

Open with the legal review (transaction counsel walks through their findings)

Tax advisor responds with any tax implications of the legal structure as drafted

Accounting team responds with any accounting mechanics implications

Round 2: each advisor revises their findings based on the others' input

Round 3: alignment on the specific terms to negotiate with the buyer

The session works best when the seller (or a financial planner representing the seller) is present to react to the implications for the post-close financial plan. Without the seller's voice, the advisors can optimize for elegance over practical outcome.

Step 4: Document the joint decisions

The output of the coordinated session is a short document listing:

The terms the seller will negotiate to change

The fallback positions if the buyer pushes back

The terms the seller is willing to accept as drafted

The cross-discipline implications of any structural changes under consideration

Without this document, the work of the coordinated session is lost in translation between sessions. Transaction counsel needs to know what the seller will and will not accept when they are at the table with the buyer's counsel.

Step 5: Plan the second round

Most deals require more than one coordinated session. The first surfaces the issues; the second confirms the resolution after the buyer has responded to the proposed changes.

Topics to plan for the second session:

Which provisions the buyer accepted, rejected, or counter-proposed

The tax and accounting implications of the counter-proposals

Whether any structural changes have downstream effects on other provisions

The timeline to signing

The second session is shorter than the first - usually 30 to 45 minutes - if the first one was effective. If it is longer than that, the first session probably did not fully surface the issues.

Step 6: Hand off to post-close monitoring

The escrow review does not end at signing. The seller needs to track the escrow's status over the hold period, respond to any claims, and document the release at the end. Topics to clarify during the coordinated review:

Who at the company or on the advisor team owns the post-close monitoring

The cadence for reviewing any claim activity

The process for responding to claim notices

The documentation needed for the eventual release

Without explicit ownership, the monitoring sometimes lapses, and sellers discover claims at the end of the hold period that have been pending for months. The SEC's investor education portal and similar regulatory resources cover general background on the regulatory framework around private-company transactions for sellers who are themselves accredited investors.

What goes wrong without coordination

A few common failure modes when the coordination does not happen:

Tax-inefficient structures get locked in. The legal team optimizes for clear indemnification language, the accounting team optimizes for clean working capital mechanics, and neither has time to think about the tax timing. The seller signs an agreement that produces a worse after-tax outcome than necessary.

Working capital and escrow interact unexpectedly. The working capital adjustment depletes the escrow because no one mapped the interaction. The seller is surprised by how much of the escrow is gone before the hold period even starts.

Specific indemnities get rolled into the general fund. A specific environmental or tax indemnity that should have been a separate sub-escrow gets bundled into the general escrow. The seller's exposure on the general provisions ends up larger than intended.

Post-close monitoring lapses. No advisor is explicitly responsible for tracking the escrow, claim activity goes unmonitored, and the release at the end of the hold period is partial because of unresolved claims that no one was watching.

How this fits into the broader sale preparation

The escrow coordination is one element of a broader sale preparation effort that also covers the purchase price structure, the working capital target, any earnouts, employment agreements, and the seller's post-close financial plan. Background on the broader topics is at https://capivise.com, and the fuller article specifically on escrow holdback topics is at https://capivise.com/blog/escrow-holdback-after-business-sale-topics-clarify-advisors. The American Bar Association M&A resources cover the legal-side standards in more depth.

This is general background, not advice

The steps above are educational, intended to help business owners frame the coordination with their advisor team. They are not investment, tax, legal, accounting, or financial advice. Every decision about your specific transaction should be reviewed with appropriately licensed professionals familiar with your jurisdiction, deal structure, and personal financial circumstances.

Sellers who run the coordination as a structured process during the negotiation, rather than treating each advisor's input in isolation, tend to end up with terms that match their goals across all three disciplines. The structure is the leverage.

[investingguidebook]

How Families Typically Coordinate Their Advisor Team Around a Quality of Earnings Process

The single biggest source of friction during a quality of earnings (QofE) process is not the QofE work itself - it is the coordination across the advisor team. Without coordination, the accountant, banker, lawyer, wealth advisor, and QofE provider often end up working from different versions of the picture, which produces avoidable conflict during negotiations and weaker outcomes for the family.

This guide walks through how families typically coordinate their advisors around the QofE work. The framing is educational. Specific coordination decisions should be made with the licensed professionals advising on the situation.

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Step 1: Identify the Lead

For most QofE engagements, one advisor takes a coordinating role. Which one depends on the deal size and the family's relationships.

For larger transactions, the investment banker or M&A advisor often leads coordination. They have the broadest view of the process, the buyer pool, and the timeline. They are also typically the most experienced at the choreography of an M&A process.

For smaller transactions, the accountant or CPA often leads. Many smaller deals do not involve a banker, and the accountant has the deepest knowledge of the books and the most continuous relationship with the family.

In some cases, the lawyer leads, particularly when the deal has substantial legal complexity or the family has a long-standing lead counsel relationship.

The point is not which advisor leads but that one is identified. Without a designated lead, the coordination defaults to the family, which is usually not the family's strongest role.

Topics worth clarifying when identifying the lead include:

Who has the most experience coordinating across QofE engagements

Who has the most consistent presence through the process

Who has the broadest view of the goals beyond the QofE

Who has the most credibility with the family in making coordination decisions

The family does not have to delegate decision authority. The coordinator is responsible for keeping the team aligned, not for making decisions on behalf of the family.

Step 2: Set the Coordination Cadence

Once the lead is identified, set a cadence for team-wide coordination. Common patterns:

Initial team meeting before the QofE engagement. Everyone meets, the QofE strategy is discussed, each advisor's role and timeline is clarified. This meeting prevents the most common source of misalignment.

Mid-engagement check-in. Roughly halfway through the QofE work, the team reconvenes to review preliminary findings and discuss implications.

Findings review meeting. When the QofE work is complete, the team meets to review findings and align on implications for negotiations, tax planning, legal drafting, and wealth planning.

Pre-launch meeting. Before going to market with the business, the team reconvenes to confirm everyone is working from the same picture and to address any remaining gaps.

These meetings do not need to be elaborate. Often a 90-minute video call is sufficient. The discipline of the meeting matters more than the format.

Topics worth covering in each meeting include the QofE strategy, the latest findings, the impact on each advisor's work, and the next set of decisions the family needs to make.

Step 3: Establish Communication Norms

Coordination requires a baseline of communication between the advisors outside the formal meetings. Topics worth clarifying include:

Who is on which email threads. Loose practices around CC lists produce information gaps that cause coordination failures. Setting norms in advance helps.

Document sharing protocols. Where does the QofE working draft live? Who has access? How are revisions tracked?

Confidentiality boundaries. Some information is appropriate for the deal team but not for the wealth advisor, or vice versa. Defining the boundaries in advance prevents inadvertent breaches.

Escalation paths. When a question arises that affects multiple advisors, how does it get raised and resolved? The lead coordinator typically handles this, but the path needs to be clear.

The American Institute of Certified Public Accountants publishes professional standards on multi-advisor coordination that pair well with the conversations above. Resources from independent bodies like the Internal Revenue Service provide background on the tax-specific communication patterns the team typically follows.

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Step 4: Align on the Family's Goals

The advisor team can coordinate effectively only when everyone understands what the family is optimizing for. Topics worth clarifying:

Speed versus value. Is the family willing to leave value on the table to close faster, or willing to wait longer for a better outcome?

Cash versus rollover equity. Is the family looking for maximum cash at close, or willing to take rollover equity for a richer headline number?

Legacy considerations. Are there post-close roles for family members, continuity considerations for long-term employees, or other non-financial factors that affect deal structure?

Charitable goals. Are there charitable contributions planned around the sale that affect timing and structure?

Risk tolerance on indemnification. How much post-close exposure is the family comfortable with?

Each of these affects how the advisor team thinks about the QofE findings and the negotiations that follow. Without clarity on family goals, advisors default to their own typical preferences, which may not match what the family actually wants.

The conversation about family goals is often the most important part of the coordination process. It usually requires the family principals to spend time among themselves to clarify what they actually want.

Step 5: Manage the Wealth Advisor Touchpoints

The wealth advisor is often the most easily overlooked part of the team during a QofE process. The deal-focused advisors (banker, lawyer, accountant) are sometimes in heavy contact with each other while the wealth advisor is only looped in late.

This is a pattern that consistently produces post-close planning regret. By the time the wealth advisor sees the deal structure, key decisions have been made that affect after-tax proceeds, reinvestment options, charitable timing, and estate planning interactions.

Topics worth clarifying with the wealth advisor early include:

Estimated after-tax proceeds under several QofE-driven price scenarios

Reinvestment timing and vehicle preferences

Charitable contributions planned around the sale

Estate planning interactions with the proceeds

Liquidity timing for family expenses post-close

The wealth advisor's input often shapes deal structure choices that the deal team would otherwise make differently. Looping the wealth advisor in early is one of the highest-leverage coordination moves families make.

Step 6: Plan for the Post-Close Transition

Coordination does not end at closing. The advisor team continues to be relevant during the transition, particularly around:

Working capital adjustments. Most deals include a true-up at closing that can produce material changes to the dollar amount received.

Indemnification claims. Claims by the buyer for items covered by indemnification may arise weeks or months after closing.

Earnout measurement. If the deal includes an earnout, the measurement and dispute process continues for the earnout period.

Tax reporting. The first tax year after closing involves significant reporting work, often with implications across multiple advisor roles.

Wealth deployment. The reinvestment of proceeds typically happens over months, not days, and the wealth advisor's coordination with the tax advisor matters throughout.

Topics worth clarifying in advance include the cadence for post-close team meetings, the documentation handoffs that happen at closing, and the financial structures that need to be in place before the proceeds arrive.

For more on the topics families typically review during a business sale, the Capivise educational hub on business sale planning collects related material. The longer Capivise guide on quality of earnings reports covers each area in detail.

A Coordination Checklist for Families

For families preparing for a QofE process, these are the coordination topics worth surfacing first:

Who is the designated coordination lead?

What is the team meeting cadence?

What are the communication norms?

Are family goals clearly articulated to the team?

Is the wealth advisor looped in early enough?

Is post-close transition planning included in the scope?

Each is a starting point for a conversation, not an answer. The answers depend on the specific situation, the specific advisors involved, and the family's goals.

A Note on Educational Framing

The coordination work described above is the family's responsibility. No single advisor can take it on entirely, because each advisor has a specific scope and incentive structure that limits the role they can play in coordinating across the team.

The educational framing in this guide is intentional. None of this constitutes professional advice. Specific coordination decisions in any actual transaction should be made with the licensed professionals familiar with the facts.

The patterns above are consistent across many sale processes, but the application of each pattern is specific to the engagement. A family that comes to the QofE process with a basic coordination framework tends to get better outcomes than one that approaches it cold.

Coordination is the part of the process families most often underestimate and most often regret not doing well. The cost of doing it well is small relative to the magnitude of the transaction. The payoff is substantial.