Quantifying Your Options
A well-planned transition will assess each option and may require advanced planning and specialized expertise to achieve your goals. Knowing your options will reduce your risk and help you make well-informed decisions.
What range of values can you expect for the options that are available for your business? Not all businesses are viable candidates for a third-party sale to a private equity group or an industry competitor. Which option(s) are aligned with your personal goals? How does that measure against your financial goals?
Bridging a Gap
In this example, if the owner’s intent is to sell by MBO to employees, there is a $2 million gap to fund retirement. Advanced, holistic planning will identify gaps and may help you discover ways to achieve all your goals. Early planning gives you time to adapt, bridge gaps, and reassess your priorities.
Here are just a few ways that gaps can be mitigated:
- Catch up on savings and diversify your wealth with a custom-designed retirement plan that can accelerate tax and savings benefits
- Create an internal market for employees (via qualified or non-qualified plans)
- Tie key employees to the business (with equity or phantom equity)
- Tax planning for your business transfer
- Increase business value
A Process for Shareholder Protection
Another often overlooked risk with small business owners is the failure to have a documented process for shareholder buyouts. Buyouts are often unplanned, poorly planned, or forced by trigger events like death, divorce, or disability. A documented process can help prevent uncertainty, misunderstanding, and costly litigation.
I hate to use clichés but when they help clients to understand key concepts that can get lost in technical details – I’ll use em! No pain, no gain; no guts, no glory – are ways to describe the risk vs. return decision. Investors have choices in how to invest across a...
Most small business owners think about the future of his or her business. Because “the business” is usually the primary wealth generator and a large portion of personal net worth, many estate planning issues interact with business succession planning. A business...
A Buy-Sell agreement (BSA) serves several key purposes for business owners. A well-articulated BSA creates a ready market and liquidity to a selling owner, and should establish price, terms, and financing for the transfer. In short it spells out a process so that all...