Are you a family business owner that is starting to think ahead to The Golden Years of retirement? If part of your retirement plan is to sell your business, you will want to read this article in order to help maximize your return. As with all major business decisions, careful thought to all possible outcomes and timing are everything.
Time. The decision to sell your business should not be one that is rushed. The more time you have, the better the result. Allowing time helps you to think thru possible pitfalls and options. Giving yourself ample time also allows you to evaluate when the right time to sell is. Evaluating your business standing with a CPA will help determine if and when selling the company will allow you to maintain your standing of living.
To Cash Out or To Finance. Although cashing out is ideal for most owners, it is likely not possible for most buyers, especially if they are family members or key employees. In many cases, the purchase of the business will be at least partially financed. A CPA can help you structure the transaction so that the owner can collect enough of a down payment to protect himself in the event that payments are slow or in default.
Company Value. It is imperative the the business owner and the CPA have a frank discussion of the business’ value, how that value is determined and substantiated, and how that translates to the marketplace. This discussion should take place with the business owner’s entire advisory team, including the corporate and estate planning attorney.
Housekeeping. When seriously considering selling your business, it is important to have your corporate/business house in order. The exit planning stage is the time to make sure the following are current/up to date:
- Corporate minutes
- By-laws and operating agreements current, in place and signed
- Stock ledger is up to date
- Leases are valid and current
When planning to sell your business, it important to remember that there is not only a lot technically to take into consideration, but also emotionally. Having your team in place to help logistics run smoothly will alleviate stress for you and have you better equipped to deal with the emotional aspect of selling something that has been a part of your identity for many years. It is within your power to make the transition less stressful. Talk to Gold Standard to help you thru this time and enable yourself to start planning for The Golden Years.
For more questions for consideration on this subjects, please see this article in The Journal of Accountancy.
