Transition planning – an ounce of prevention
Many business owners are unaware of the different options available when it comes to selling or transferring their business. It’s clear that owners put an enormous amount of time and effort into growing their companies, but few, however, put as much time and effort into their exit strategy. For many entrepreneurs, retiring comfortably after a long and successful career is the end goal – but this comes with a lot of necessary preparation, and decision making that has to start now.
The art of selling
With forethought and advanced planning, implementing proper strategies can help you avoid severe tax implications and allow you to keep the most money possible from the transaction. Many business owners rely on the impending funds from such transactions to provide for their retirement; however capital gains from a sale alone can severely impact retirement plans. It’s crucial to consider all options and plan ahead thoughtfully. Planning now can help you maximize your return, minimize tax, and align future expectations with your current reality.
There’s selling, and then there’s everything else
It’s important to think of the instances beyond retirement that may cause a business owner to leave his or her business:
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 unplanned for or unforeseen circumstances. 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.
Keeping it all in the family
Succession planning helps ensure the family business and its legacy will live on for another generation. When it comes to a family business, succession planning can be a sensitive matter. It’s truly unfortunate when a divisive issue ultimately ends up affecting the current business negatively. Even more so, disagreements or opposing goals can ruin relationships and destroy family bonds. Proper succession planning through an experienced advisor helps:
- facilitate much needed discussions with each family member;
- navigate sensitivities objectively; and
- eliminate the chance of potential conflicts becoming costly issues.
Regardless of whether the end goal involves the sale of a business or transfer to a new generation, it’s imperative to protect yourself, and all that you’ve built. There are many implications that can befall a business owner but a solid plan will prepare you for a realistic exit and help avoid potential conflicts that could damage your company, your finances and possibly, your family’s well-being. With proper exit planning, managing the unanswered questions earlier provides for a smoother transition and a happier retirement.
With Richter’s collaborative approach, our advisors help ensure that clients receive customized advice. Richter has been serving entrepreneurial business owners in the fields of manufacturing and distribution, real estate and construction, information and technology, and retail for the last 90 years. Additionally, we offer wealth management, transaction advisory, business valuation, risk management, and restructuring services to ensure our clients’ businesses are cared for and set up for success.
About Richter: Founded in Montreal in 1926, Richter is a licensed public accounting firm that provides assurance, tax and wealth management services, as well as financial advisory services in the areas of organizational restructuring and insolvency, business valuation, corporate finance, litigation support, and forensic accounting. Our commitment to excellence, our in-depth understanding of financial issues and our practical problem-solving methods have positioned us as one of the most important independent accounting, organizational advisory and consulting firms in the country. Richter has offices in both Toronto and Montreal. Follow us on LinkedIn, Facebook and Twitter.