Business owners can’t be all things. Read that again.
The phrase “it takes a village,” can also resonate with business owners trying to maximize the success of their business.
Over our decades-long journey helping business owners at Consolidated Planning, we’ve learned that the success of a small business is partially possible with trusted professionals for business owners to rely on. Just because you can feel siloed at times in your business, doesn’t mean you have to remain that way.
Just like you’re experienced in your niche, professionals you need on your side are experienced in theirs. In what follows, we’ll help you understand the three business professionals that can help drive the success of your business succession and sale. As well as any additional professionals that your scenario might require, all to help you surround yourself with trusted professionals to build value in your business today and help you plan for tomorrow.
What Professionals Will Help Drive The Success Of Your Business Sale?
Selling a business is perhaps the largest, most important, and most complex transaction you will experience. And with so many moving parts, it’s worth getting right the very first time. It’s essential to the success of your business, from pre-sale planning, to the well after the sale, to having the RIGHT professionals on your team.
#1 Experienced Closing Attorney
Having a closing attorney on your side is the best way to protect your best interest o as a seller, especially when tax planning, estate planning, key employees, or complex businesses are involved. Your closing attorney will help facilitate the planning stages and final stages of the transaction and ensure that legal pitfalls are identified and avoided.
Some of these matters may include:
- Stock transfers to family, trusts, ESOPs, venture capital, and more
- Debt associated with the buyer’s purchase
- Tax mitigation planning at and after closing
- Ensuring the key employees, who are often needed to maintain the value of the business, are retained by the company
- Methods to protect seller from future liability
#2 Certified Public Accountant
A good Certified Public Accountant (CPA), of which can be your personal CPA, is essential to your business. Because CPAs typically wear many hats, their knowledge is a vast resource to you and your business. From financial wellness to risk management and strategic planning, your CPA can prove to be a huge time saver for you to focus on being a business owner.
Because tax structures aren’t set in stone, and that tax laws change over time, having a good CPA on your side is a benefit today and well into the future.
#3 Exit Planning Financial Advisor
Your exit planning advisor will generally take into account two aspects – the transaction planning for the business itself, and the retirement distribution strategy which includes all the the sellers assets, to see how they align. After the business is sold and taxes are paid, is there enough left over for the owner exiting to successfully retire on their terms?
Transaction Type
Transaction planning refers to whether the sale of your business is either an inside sale or a third party sale. Your exit planning financial advisor will be in tune with how to maximize and minimize where necessary the aspects that affect your transaction type, including:
- The best methods to meet the seller’s financial and non-financial objectives.
- If selling to an insider, what to avoid and what is ideal. How do I maximize sale proceeds, minimize price, and make the next generation of owners be viable?
- If selling to a third party, how can I maximize my sell price, minimize my taxes, and collect most of my cash proceeds up front?
- Guidance and advice on how to retain key employees and executives to maximize the sale value and ensure the continuity of the business
- Provide modeling of how the business exit cash flow will look on a pre-tax and post-tax basis
- When selling to an insider offer recommendations to minimize capital gains taxes for the owner at closing
The complexity of the business transaction needs to properly align with your post-sale income requirements.
Retirement Distribution Strategy
The retirement distribution strategy when aligned with the transaction planning helps paint a picture of what your future income should look like and frankly, NEEDS to look like for life after being a business owner.
Depending on if your transaction gives you the cash at sale or the cash flow post-sale, either 1M today or $100,000 for 10 years, how does your payout from the sale co-mingle with your other assets?
Alignment between these two aspects provides an accurate and clear financial outlook for what your income will look like.
Other Professionals Might You Need As A Business Owner
While there are countless other professionals you might consider, there remain just a few that very well may be necessary depending on your situation.
#1 Business Broker
This professional will help facilitate your third party sale. Just like a realtor connects homeowners with potential buyers, a business broker connects business owners with potential qualified buyers. Oftentimes a third party sale requires a “mail man,” if you will. A business broker will help:
- Market your business, and
- Create a market for your business
#2 ESOP Trustee and Provider
An employee stock ownership program (ESOP) provider is a true inside sale that can be used to help facilitate the sale of a business on a tax favored basis. The result here is employee owned, and is often more popular when taxes rates are high and interest rates are low.
#3 Charitable Organization
A charitable organization will assist with the presale transfer of closely held stock to both benefit the charity and reduce taxes for the owner at the sale.
A charitable gift fund is another option. This is often a great stop gap for sellers who don’t know where they want the dollars to go but want the deduction at the sale.
#4 Valuation Experienced Professional
Knowing the true monetary value of your business matters, especially for the sale of your business. A valuation professional may use a variety of methods and analysis to provide you with an unbiased estimate of your business’ value.
This professional is needed when there is debt involved when it comes to the buyer. If the buyer doesn’t have the funds and has to go to the bank to purchase the business.
Ultimately, the value of the business is the value the buyer is willing to transact for.
Include The Right Professionals For Your Business
Selling your business will likely be the largest transaction of your life. So while having these trusted professionals on your roster will cost you, it’s a cost that matters to the success of your business.
Ideally, the sooner you can find at least these top three trusted professionals for your business, the sooner you can know which way the wind is blowing when it comes to these questions:
- What does my ideal exit structure look like?
- What can I do to increase the value of my business before the sale?
The team at Consolidated Planning recommends you have these professionals on your team 5 to 7 years before the sale of your business. If you find yourself one year out from selling your business and DON’T have these professionals on your team, it’s time to take a step back and get your ducks in a row.
You only get to sell your business once, don’t make a rash decision here.
2023-164964 Exp. 11/2025
Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only.
This material contains the current opinions of Andy Brincefield and Consolidated Planning only. These are not the opinions of Park Avenue Securities, Guardian, or its subsidiaries.
