We’ve all heard the saying, “Fail to plan, plan to fail.” This is extremely pertinent if you’re thinking about transitioning your business. Many owners focus solely on the exit transaction itself without spending the time to properly prepare for it. Transitioning your business can take many forms, from passing to a family member to selling to a strategic partner. Here are some things to think about before you transition.
Are you ready to leave?
Many business owners fail to consider what they’ll do after a transaction. Do you plan to continue to work in the business? For how long? To whom will you report? If you’re no longer the owner, then you will NOT be in charge. If you’re not present, is existing management prepared to run the business? What will you do?
Have you mapped out your financial plan?
Prior to any transaction, you should evaluate your finances and create a personal balance sheet with a lifetime spending plan. How much wealth does it take to retire? What kind of lifestyle to you plan to have? Have you considered medical costs? Don’t forget to update your estate plan to take into account personal and charitable bequests.
What’s your business worth?
Sure, you may have an idea of the value of the business. How can you best position the business for maximum value extraction? What’s your best option? What about nonfinancial considerations?
The decision to turn over your business to someone else is a difficult one. Think about your goals before you proceed, then “Plan your work and work your plan!”
You’ve heard our thoughts… We’d like to hear yours
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.