Business Transition & Succession Planning

At some point, most business owners want to transition out of their businesses. Whether there is an internal sale, an outside sale, or a transition to the next generation, it is important that each of these events is carefully planned and considered. This is the point in time when a “liquidity event” will also expose the owner to their largest income-tax event–unless proper planning is put in place well ahead of the transaction. Too often, there is very little effort made to mitigate the tax impact of a business exit. The result is frequently less than optimal, with unnecessary taxes reducing the net to the family. Planning well in advance of a transition is critical to a successful exit. Pre-positioning assets so that the business owner realizes the greatest net value from this opportunity is an important consideration.

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Every detail must be reviewed. Entity structure often controls disposition options. With advance notice, we can formulate the most tax efficient exit plan. Business owners (this includes owners of real estate) often spend their earning and accumulation years aggressively minimizing taxes. It is often surprising to see how little attention is paid to the impact of taxes at the time of exit. It makes little sense to spend a lifetime accumulating and growing an enterprise, only to see much of it lost to taxes at the most critical time. 

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When an owner finally steps away, their main source of financial security is often left behind. Becoming untethered from financial security can be unsettling for many. That’s why planning for a financially successful transition is so vitally important.

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In the course of the owner’s exit, there are frequently qualified plan assets that need to be considered as well. The exit plan for these assets can be as important financially, as the exit plan for the business. There are several options to consider and analyze in the context of the overall planning. Selecting the proper qualified plan strategy 

There are several other business transition issues as well including: Preparing the business for sale; preparing the successors; preparing the owner for transition to a different future. All of these issues must be considered and dealt with prior to the sale. We have resources who have the skills to address each.