Once your plans are in place, our Service Department is available on a day-to-day basis to solve problems or to answer questions. Our unique Internet-based Client Member Documentation System (CMDS) enables us to track and report service in a quick and efficient manner.
The CMDS database was designed to serve our clients. It is based upon direct contact with covered individuals who cannot satisfactorily resolve their problems through normal channels provided by the plan. It reflects our understanding of our clients' often unmet needs.
Exit & Succession Strategies
There are a number of issues that need to be address when you are seriously considering selling your business, such as what you will do after the business is sold. Thinking about these questions now before you have a potential buyer is important because it suggests how you might structure the sale.
For example, if you plan to sell one business and buy another, you probably will want as much immediate cash as possible from the sale in order to buy the company. You may have to pay significant capital gain taxes if your old business was successful, or there may be a complex tax-free exchange of stock that a committee of lawyers will have to figure out for you.
On the other hand, if you want to sell without immediate plans to purchase another business and are too young to retire, you may want to buy another company in a few years. In this instance, once again you will want maximum cash from your sale. You may pay the capital gain taxes and then place the remaining proceeds in a savings or investment account of your choice, ready for your next purchase.
However, if you are not planning to buy more companies and want to retire, you face paying capital gain taxes without an offsetting benefit (i.e., the purchase of another company).
At TFG, we know that it’s critical to understand what our clients are trying to achieve with the sale of their company. That’s why we take the time to learn about them on a personal level, while educating them about the planning tools and techniques available to help them in the process. As a result, we are able to develop a blueprint for the sale of their company that best satisfies their goals and aspirations.
Some of the critical questions in the planning process are:
- How do you position assets prior to a sale to minimize taxes and maximize proceeds?
- How much will you receive when the deal is complete?
- Is it enough?
- Do you need a lump-sum, income stream, or a combination of both?
- Should you accept cash, stock, or both?
- Can you afford to try your next venture?
- How much can you afford to spend on fun stuff, i.e., planes, homes, cars, boats, etc.?
Alternatives to Selling Your Business
The choice to sell a business often arises from pressures beyond the owner's control. Family responsibilities, partner disputes, lagging prices, and product or market shifts can all take a toll on a company and its owner. Selling the company outright, however, is not your only way out. Today, more than ever, there are a number of different options available to business owners who want to reduce their role but don't necessarily want to leave the business entirely.
Going Public
The initial public offering (IPO) always receives a great deal of attention, and while many view it as an ultimate goal, it can also be a good alternative to selling off the firm. Going public, which entails offering company stock to the public on an open market, can raise large sums of capital that may have been out of reach for your company. But because each industry has different criteria for IPO success, be sure to first research the IPOs of similar-size companies in your field. Serious contenders should have a three-year track record characterized by accelerated growth. Ask yourself these questions:
- Do you have a good product and a good story?
- Do you have a market-driven reason to attract new capital?
- Can you partner with an underwriter?
As the owner, be aware that an IPO for your company will mean a significant loss of control. You will be accountable to outside investors, most of whom are in it for the money and do not share your passion for your company and its product(s) or service(s). You will also encounter strict Securities and Exchange Commission regulations and record-reporting rules. As a result, once confidential company information can become a matter of public record.
Selling Corporate Assets
Many companies get into trouble when they bite off more than they can chew. Expanding or diversifying too quickly, buying unnecessary property, or absorbing smaller companies that turn out to be mismatches can all push once successful firms toward failure. Though it's difficult to cut back or restructure, sometimes it's the best alternative to selling the business outright. Before you decide to sell off part of your business, solicit an outside financial advisor to appraise your assets and determine a fair market price for each you are considering selling. When choosing what assets to sell, first look at assets that aren't directly tied to your core business. Also look at assets for which there is a strong market: this will ensure that you get the best possible price for those assets.
Succession Strategies
Privately-held companies often make the mistake of neglecting to make succession-management plans. Outsiders generally view the absence of a succession strategy as a company weakness. Failure to implement succession plans can dash a potential IPO, discourage a management buyout, and repel underwriters or institutional investors. In order to ensure a smooth transition, it is crucial for owners to establish succession strategies several years in advance. Family members and key employees are two good starting points when looking for potential successors.
For more information on exit and succession strategies for your business, please email us at
info@tfgroup.com to arrange for a complimentary consultation.
