If you’re a business owner and preparing to sell soon, these six steps will prepare you for an orderly and well-orchestrated process:
- Identify your personal and business goals. For most business owners, much of their personal wealth is in their business. Therefore, it is important to integrate your personal and business goals. Start by speaking with professionals who can formulate an estate plan that meets your goals.
- Find out the value of your business. You must know what the market value of your business is today, so you can plan for a successful exit in the future that will meet your financial needs.
- Initiate a plan to protect and promote the value of your business. Put processes in place that allow your workforce to operate the company without your assistance and reward growth with compensation based on key performance indicators.
- Sell your business! Options include selling to insiders (management or family members), Employee Stock Owners Plans (ESOPs) or to third-parties (competitors, strategic buyer, private equity, etc.)
- Ensure the continuity of the business after the sale. Create strategies that ensure key employees stay with the business after the transaction occurs.
- Follow the pre-planned estate plan. Now that your business is converted to cash, follow the estate plan put in place in step one.
Mike Metzler, CPA/ABV, CMA, CGMA, ASA