Exit Planning

Eight Steps to Building a Successful Transition Plan

Transitioning a family business is a delicate, time consuming and potentially hazardous undertaking. There are numerous tax and non-tax factors to consider. Common complexities include how to handle family members who work in the business versus those who do not, and liquidity issues that inevitably arise when the bulk of the family’s wealth is tied up in the productive assets of the business.

Never Let the Buyer Work in the Business!

Assuming ownership of a new business is one of those tough, scary-as-heck jobs. It’s tough for the business buyer. It’s also tough for the seller, employees, vendors, customers, et al. Nobody’s comfortable with change. In a business purchase-sale transaction, if you don’t burn the bridge, retreat will be the more likely result.

Sell It, Make a Bundle and Get to the Good Life!

Who wouldn’t want to retire, sell the company and put money in the bank? Who wouldn’t want to have the time and freedom to travel, play tennis, exercise and volunteer? Even spend more time with the grandkids?

For Sale by Owner?

Do you remember the old saying “The person who represents himself has a fool for a client”? Athletes, highly paid executives and persons involved in legal disputes adhere to it. Unfortunately, some business owners do not. No doubt, you’re an amazing person – but you have to admit that you can’t do everything. Otherwise, you would have no employees, no suppliers and no worries.

Sell the Business or Die in the Saddle?

You fought and clawed your way into business ownership. Then, several times, you did it again just to survive. The years rushed by. The kids are grown. A few of your retired friends have asked, quite crudely, “You gonna die in the saddle?”

ESOP: Your Dream Exit?

The ESOP offers powerful and compelling benefits – but it’s not for every person or every company. It adds an ongoing layer of cost and usually involves the use of leverage, so good candidates will have healthy profits and cash flow. It also often requires that the seller accept a buyout over time and bare some ongoing financial exposure to the business – at least for a few years. If these aren’t deal killers, you may have a lot to gain from an exit by ESOP.

Don’t Sell. Retirement’s for Wimps!

Heck no. You don’t have to retire. Strom Thurmond remained a U.S. Senator through the age of 100. Dwight Hauff is 103 and owns Hauff Sporting Goods in Sioux City, Iowa. Jack Weil is 106 and still owns Rockmount, a Denver-based manufacturer of Western shirts.