Background:
The majority owner of a lucrative firm, with approximately 50 employees, is ready to start transitioning out of the business. The ownership is shared amongst four people. The majority owner is in her mid-50s and she owns a 70% stake in the company. The three minority owners are current key employees and own the remaining 30%.
The Challenge:
- The client was struggling to determine whether an internal transfer or external sale would best accomplish her goals of taking care of her employees and clients while providing for her financial security into the future.
- With the market changing so rapidly, she wasn’t sure how much her business was worth and determining the proper timeline was stressful. She didn’t have the support she needed to complete the transition.
Solution:
- Our team worked with her to discover what she wanted in life after the transaction. We then completed a thorough personal financial plan to figure out how much money she needed, after taxes, from the sale to accomplish what she wanted.
- We examined both internal and external transition strategies and calculated the net benefit of each one. In doing so she clearly understood the pros and cons of her options.
- We ensured her business was ready for transition by conducting a thorough and comprehensive business review that would allow her to maximize business value regardless of which exit strategy was chosen.
- We implemented two different estate planning strategies that allowed her to set aside assets, before the sale, for the benefit of her children while also reducing estate taxes and protecting her assets from outsiders.
- All of this important work was instrumental in her deciding that a third party sale was her best option.
The Benefit:
With guidance from our team, the owner was able to clearly understand every aspect and impact of her various exit options and make an informed decision about which would satisfy her personal financial and business needs. She now has peace of mind, knowing that her business, employees, and clients will be well taken care of in the future and that her retirement will be secure.
Let us know your questions!
Advisory services offered through Commonwealth Financial Network®, a Registered Investment Adviser.
Alliance Private Wealth LLC I 200 Park Street North Reading, MA 01864 I 978-76-1300