Business Succession Planning & Exit Strategy

A: Begin planning at least 5 years prior to a business sale to maximize value, and preferably from the first day you’re in business. Every decision you make should be in reference to a potential buyer and how they would value the decision.

A: There are lots of planning opportunities for business owners, if you’re assets are not liquid. These include maximizing retirement plan contributions, taking advantage of all available tax deductions and credits, diversifying your assets when possible, and more. Employing children is a great way for them to learn the business, shift income to a lower tax bracket, and begin saving for college or even retirement.

A: An income replacement plan will utilize the proceeds from your business sale to efficiently create an income stream (synthetic paycheck) to live on. See the income replacement section to learn more.

A: There are several strategies available to reduce current income taxes. Maximizing retirement accounts with a 401k and Profit Sharing Plan is a nice first step. In addition, a Cash Balance Pension Plan can be utilized with a Profit Sharing Plan to defer up to $250,000+/year. There are several other advanced strategies depending on your entity type, time horizon and business plan. Contact Shakespeare if you would like to learn more.

A: Yes. If a majority of your net-worth is invested in a privately held business, your other assets should likely be invested more conservatively. In addition, you want to refrain from owning investments that perform similarly to your business, ie, don’t own REITs if you are in a real estate intensive business.

A: There are several ways to facilitate the transfer of a business to a child. Some of these advanced techniques allow you to discount the value of the business when selling or gifting to family members, while still maintaining control of the business while you’re alive or until you choose to surrender control.