When we work with business owners to help them successfully exit their businesses, we follow a systematic approach to ensure that we are able to maximize what they take from their businesses, while minimizing the tax consequences.
"Beginning with the end in mind" gives us a starting point to identify the business owners' goals and objectives. We must understand when they would like to begin transitioning from their business in order to define some key targets. This also starts to present a picture of where we stand in relation to their personal financial goals.
Piecing together these other pieces of the puzzle, we start to get a sense of whether it makes more sense for the business owner to transfer the business to a third party or to an insider such as a family member or key employee.
Additionally, there may be other objectives that the business owner wishes to achieve, such as taking care of employees.
It important to note that the “value” of the business may not equal the amount of cash they take from it. Working with financial advisors, we ensure that we preserve as much business value as possible from the grasp of the IRS & creditors.
Depending on the owner’s choice of successor - If selling to a third party, we follow a systematic process. If transferring the business to an insider, we minimize risk by reducing the time that the owner has to carry a note.
Later, we spend time making sure that owners and their families benefit from their lives’ work should they die or become disabled prior to their planned exits.
Finally, we put in place the arrangements necessary to make sure that once business owners are out of their business, that the short and long term personal financial goals are achieved and that as much of their wealth as possible is legitimately protected from the IRS.
Exit Planning is a systematic process that requires input from a team of expert advisors.
Our next Executive Briefing is on 5/16/07 - please join us as my guest to learn more about how to make sure that you achieve your goals when you leave the company you’ve worked so hard to build. Contact me via email or call 510-550-7255.