New York Estate Planning & Elder Law Blog
Far too many entrepreneurs, despite their successes in business, have put far too little time into planning for the eventual sale of their business for retirement. In fact, more often than not business owners do not start planning the sale of the business until the day that they sit down with a potential buyer. Starting this late almost always means that money is left on the table, and it is far too late to make a meaningful difference in the money that you will be able to keep when you sell your business.
Talk to Estate Planning Attorneys
One of the most important people to speak with when planning the sale of your business is an estate planning attorney. After explaining the financials and structure of your business as well as a timeline for when you wish to sell, your estate planning attorney can review your tax situation and explain what your options are to save the most money in an estate plan.
There are many different estate planning tools at your disposal to mitigate the amount that you will owe in taxes after you sell. Keeping more money from the sale is essentially the same as selling your business for a higher value.
Craft a Narrative Through Your Financials
Many business owners believe that their financials are good enough for them. However, those financials are not always good enough for potential buyers. To maximize the amount that you can sell your business, you need to tell your buyers a story through your financials that will resonate.
Consider making sure that your financial statements is GAAP (General Accepted Accounting Principles) compliant. In addition, it is also good practice to have your financials audited before starting the selling process.
Institutionalize Your Management Team
Small business owners tend to wear many hats in their business: CEO, Accountant, Payroll Manager, and janitor to name a few. However, buyers want a sustainable business that will not fall apart the second that you walk away, and if you fill all of those roles the business is probably not sustainable without you.
You need to take time to institutionalize your management team so that the business will still be standing after you sell. The alternative is that you sell your business for less value and stay on until the new buyer can build the team that needs to be put in place to fill the void.
Manage Your Risk
You should try to reduce as much risk as possible before selling your business. Common examples include solidifying client relationships, contracts, leases, and suppliers that will last after the business has been sold. Don’t forget to think about solidifying employee relationships, too, so that most of the workers do not leave after you do.
Talk to an Attorney
In addition to speaking with an estate planning attorney, also consider speaking with a mergers and acquisitions advisor, as well. Getting a professional assessment of your business can make a huge difference when it comes time to sell.