A current phenomenon is the record numbers of those from the Baby Boomer generation preparing for retirement. This increase is due to the younger Boomers reaching the common ages for moving into retirement, which is known as “Peak 65.” In the following post, our business lawyers examine how retiring business owners can prepare for a successful buyout.
Will I Be Able to Sell My Business?
As many older adults leave businesses in every industry, logic dictates that more businesses will be for sale. That does not mean that selling your business will necessarily be a challenge. To leave your business on your own timeline and in the hands of someone who makes you feel comfortable, there are several factors to consider:
- Do you want to leave the business with a family member?
- How much money do you need to generate from the sale?
- Do you still want to work for your company after you sell it?
With some planning and care, you can create real opportunity for you and your family by establishing a strong financial foundation. You can do all of this without jeopardizing your hard work to get your business to where it is today.
What Do I Do to Prepare?
As you evaluate when you are going to sell your business, how you will market it, and what individual or organization you want as a buyer, there are several factors to evaluate. Thinking about these will prepare you for the best possible outcome for you, your business, and all of the people who are invested, emotionally or financially, in what you have built.
Considerations in Selling
Identifying the timeline for sale involves planning carefully and outlining strategic goals for the future. Ensuring all adjustments to financials and operations are complete before you sell will improve the reputation of your business before you enter the market. It will also make it more attractive to those interested in making the purchase.
Another important piece will be placing a strong leader in place who can assist with transition and continuity upon your departure. Much like preparing a home for sale, doing everything you can to increase your business’s “curb appeal” and interior stability will bring high-quality buyers and a better price.
Tax liabilities are an important piece of this complicated puzzle as well. As you consider the sale of your business, do not forget that your individual financial security after the sale will require tax considerations to be part of your individual plan for an exit. As you structure the sale, you will want to be sure you minimize your tax liabilities and have a strategy for the profits.
Finding the Buyer
Just selling at the right time and with the right marketing techniques is not enough when your business is also part of your legacy. The right buyer is the perfect combination of a known entity who will preserve the parts of your business that matter most to you while offering you the right amount of money for what you have built. In order to accomplish this, you need to have a plan in place that identifies your goals and objectives for the business, which also shows how those goals will result in financial opportunity for the buyer.
When thinking about the goals in balance with the future growth potential, consider whether there are specific employees you want to protect who will add benefit to the buyer’s investment. Determine whether you want to remain a part of your business in an advisory capacity to keep an eye on things, assist with continuity, and protect the goals and objectives you have outlined for the new owner. Do not forget to consider how the sale will impact your customers and make the necessary arrangements to protect those relationships.
With your established goals and solid business plan for moving forward, you will be better positioned to find a buyer who reflects the balance you are seeking to strike with a new owner. You may also consider whether selling the business to employees makes sense, as management buyouts are often solutions to keep the company true to its culture if that is a priority for you.
Get Guidance When Retiring From Your Business
If you are considering the sale of your business, you likely already know the weight of the decision and have considered the overall impact the sale will have on your personal finances, the company you have worked hard to build, and the employees who support it.
The decisions you make matter to the people who are part of your business and your family. With help from Wofsey Rosen, you can prepare for your personal success while preserving what is important to you and those who have been part of building your legacy.