Selling a business could be one of the most important deals you ever make. That's why it's important to spend some time thinking through the process. We've listed some of the most common questions our Private Wealth Advisors encounter.

 

I’m finding it difficult to put together a financial plan that looks further than my immediate needs. What steps can I take?

One of the most important steps to forming a strong, long-term financial plan is having an experienced team of financial professionals. In addition to a certified public accountant (CPA) and lawyer, you’ll want a Private Wealth Advisor to help you think through your resources and goals, and how the former can help you achieve the latter.

As a business owner, you’ll likely want to consider mergers & acquisitions and trust & estate attorneys, as well as an investment banker who can offer guidance on business structuring and connect you to potential buyers. Once your team is in place, you’ll want to carefully consider your personal, charitable and legacy aims and understand how your wealth can help you achieve those desires.

 

How do I find specialists to join my team?

Capital Group Private Client Services can provide many of the services you require for your wealth planning needs, from portfolio analysis to forward-looking simulations that can model what your portfolio might do in a variety of economic conditions. Beyond that, your Private Wealth Advisor can often point you toward experienced legal or tax professionals or mergers & acquisitions specialists, depending on your situation — due to the nature of their work, they often work with knowledgeable individuals with specialized financial skills.

 

How can I mitigate taxes when selling my business?

Working with your team of financial professionals, you can utilize strategies to help reduce tax liabilities. It’s important to start this process early. For instance, the qualified small business stock (QSBS) exemption can offer significant tax benefits, but for your business to qualify, it must be a C-class corporation and you must own the stock for at least five years. Early estate tax planning is another critical way to increase tax efficiency. This might include setting up trusts, timing gifts to take advantage of current valuations and other strategies designed to reduce the taxable value of your estate.

 

How can I pursue better offers for my business?

Preparing your business for sale involves understanding big-picture issues around taxation and planning, which can help you better evaluate offers. It's also important to consider offers using a goals-based planning framework, so you’re choosing offers that are a better fit for your objectives. Additionally, having a realistic understanding of your business’s value proposition is critical. Potential buyers will look for reasons to lower their offers — so be prepared. It may be worth comparing your business with others in its peer group to see if you can make changes in the years leading up to the sale to make your company best in class.

 

What is goals-based planning, and why is it important when selling a business?

Goals-based planning is essential because money is a means to an end. Without clear goals, you might be less able to effectively utilize the proceeds from your business sale. Your Private Wealth Advisor can help you think through what’s truly important to you; a good assessment will examine your holdings and get specific about how you’ll fund the routine costs you need to maintain your lifestyle, anticipated one-time expenses and long-term goals.

 

How do I balance business and family demands when preparing to sell my company?

Business and family often intermingle, and it can be hard to balance the demands of both. Our Private Wealth Advisors have decades of experience and can offer guidance. Perhaps the most important theme to remember: Communication is key, whether family members are involved in the business or not. Setting clear expectations, as well as being transparent about the sale process and what everyone can expect from it, can help you navigate the intricate web of relationships and emotions that can arise during a significant liquidity event.

 

What are some key factors to consider when choosing a buyer?

When choosing a buyer for your business, taking the highest on-paper offer can seem like the most obvious choice, but it’s not always that straightforward. Some offers include an earnout period, a contractual provision where the seller will receive additional compensation if the business hits financial targets after the sale. While some business owners may agree to such offers given the potential for higher earnings, it may not be worth it for others who are eager to move on to their next chapters in life.

External factors sometimes also make a lower offer worthwhile. If you employ family members, it might be important that they remain involved in the business after your departure. Additionally, you may want to think about the buyer's experience and track record in your industry, as well as their plans for your employees and customers. A buyer who can provide a smooth transition and maintain the company's culture and reputation may be more attractive than a higher bidder.

 

How can I ensure a smooth transition for my employees after the sale?

Maintaining transparency and showing empathy can help ease the transition and retain valuable talent. Start by informing key employees about the sale early in the process and involve them in transition planning. Provide support and resources to help them adjust to the new ownership, such as training programs or counseling services. It’s possible to negotiate terms with the buyer that protect your employees’ jobs and benefits.

 

I’ve sold my business — now what?

Before you sell, it’s important to think through what the next stage of your life could look like. Many business owners feel a sense of emptiness, aimlessness or even regret after selling. This is another potential benefit of goals-based planning. As you prepare to sell, your Private Wealth Advisor can help you think through your long-term objectives and how you might achieve them.

You can think more about legacy planning after the sale. If you have children, you can encourage discussions about wealth and future plans to foster larger conversations around your family’s legacy.