Published on Wednesday, June 11, 2014

Important Considerations in Exit Planning

Easing the Emotional, Financial, and Psychological Impact of Selling Your Business

In order to gain some understanding and appreciation for the task at hand, the business owner can begin by considering the following questions and issues:

1. What are the owner's primary objectives in selling the business? Is there enough management depth in place to maintain business value?

2. Has fair market business value been assessed? In order to realize expected proceeds from a possible sale, the business needs to be priced at or near its true market value; otherwise the owner risks generating very little buyer interest.

3. What are the tax implications involved in selling the enterprise?  Will you invest part of your sales proceeds to generate additional investment income? If so, the owner will want to seek the counsel of a Certified Financial Planner

4. What will you do with yourself after your business is sold? Will you travel, visit grandchildren, start a new venture, care for aging parents, etc.?

5. Will there be adequate funds from the sale of the business to continue a comfortable lifestyle?

6. How will medical insurance needs be handled? If a company plan existed during the time you owned your business, the owner may not be able to obtain another similar plan.

7. Will some amount of owner  financing be provided to assist the the buyer in making the purchase? If so, the owner can realize rates of return far superior to market rates that banks and money markets pay.

8. Is the owner concerned about adult children, and what they will do should their jobs be eliminated? In that case, they will need to seek out other employment which may take some time. Generally they do not have the net worth and/or liquid assets to buyout the business.

 9. What type financial intermediary will you engage to help sell the business? You will want someone with a proven track record managing business transfers / succession planning - an experienced individual with the proper education, certifications, and credentials.

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Author: Lewis Martin

Categories: Advisory Services



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