12 July 2018
A large portion of the businesses I mentor and counsel are startups. Our focus is on how we get the business enterprise up and running. The question of the exit strategy is lost in the process. That question, however, needs as much consideration as those focused on a successful launch of the business.
How will the business operate if a key member passes on or exits the business in some manner? Have you been managing the business to optimize its value? Buyers will want to examine the financials. They are most interested in the bottom line. A strategy to minimize taxes may not translate into an optimal value from the buyer’s perspective.
Educate yourself. The University of Wisconsin Extension (https://fyi.uwex.edu/farmteam/farm-business-succession-and-retirement-planning) has an excellent set of tools focused on farm business transition planning that are equally applicable to small business transition. Plan early- now.
Assemble your transition team. As a minimum it should include impacted heirs, an attorney experienced in estate planning/business transition, accountant/tax advisor, lender, and financial planner.
Lastly, I would encourage once your plan has been developed you put it through a set of what if scenarios. Will the plan accomplish your goals?