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Transition Series

There’s selling and then there’s everything else…

It’s important to think through the instances beyond retirement that may cause a business owner to leave his or her business:

Divorce;
Death; or
Disability.

plan for a crisis

While unpleasant to consider, planning for the possibility of each instance is necessary. The last thing anyone wants to see is the hasty sale of a business due to an unplanned for, unforeseen circumstance. The best time to plan for a crisis is before the crisis occurs. An estate plan, a pre-nuptial agreement, a buy-sell agreement – all can contribute to a comprehensive transition plan and provide protection for each “what if” scenario.

“The best time to plan for a crisis is before the crisis occurs.”

Everything else… And everyone else…

The starting point in the process is to determine your needs as the owner. What is your expected timeline for exiting the business? What do you need from the business upon retirement? How will the business continue on without you? Our experts are here to help you answers these questions to protect your business and maximize your investment decisions.

Once you have answered these questions, it is then crucial to identify the needs and expectations of other key stakeholders in the business, be they other family members, business partners, or even loyal employees, customers and suppliers.  Family, business, and ownership systems are all equally important to the long term success of the business; all should be given equal respect and consideration.

Considering all the central people close to the business, it’s important to account for all options in succession. A successful transition involves determining all viable alternatives, given the stakeholder requirements. Options can be grouped into three different levels.

1. Legal Options – how will the wealth of the business be transferred? e.g. gift, annuity, buy-sell agreement, partnership, etc.

2. Funding Options – how will the transfer be funded? There are many ways to structure a financial transaction: self-funded, insurance, cross purchase, working capital, public offering – viable alternatives will depend on your specific situation.

3. Managerial Options – who will ultimately be responsible for leading the business? Will there be more than one leader? How will you transfer your knowledge over to the new leadership? Do you want to be involved with the business after the transfer, or are you willing to walk away?

Selling a business is not an immediate process; it takes time to explore the different options and prepare the business for sale. This is best started well in advance of actual retirement; five years is good, 10 years is even better.  Thinking with the end in mind (i.e. your retirement goal), is the only way to make certain that all decisions made along the way are consistent with the end goal.  Planning early is the best way to ensure a pain-free, smooth transfer, while maximizing your returns.

How we can help you

When we say our approach is holistic, we mean it. It’s centered around you. Not just your company; not only your legacy, you. We advise business owners and their families both personally and professionally. Our professionals, (from wealth management, valuations, taxation and estates, to various other service lines) work collaboratively to provide advice that makes the most sense for you and your objectives – because we know that your work affects your personal life, and vice versa – they are of equal importance. Through early, comprehensive planning, our professionals assess every situation and present options to help you make informed, strategic decisions to make the most out of your unique situation.

Read more articles on business succession planning:

What it’s worth now, and how

Should I stay or should I go?

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