Navigating Business Transition Planning – Video

Are you looking to transition your business successfully? Click the button to request your copy of the booklet, Business Transition Planning: Maximize Your Legacy, for guidance on the steps to ensure the best possible business transition for you.

Selling Your Company: The Ultimate Transition

When it comes to business transition planning several of the options have an element of irreversibility, but none have the permanence of a sale. After a set transition period, there comes a time when the former owner is no longer part of the Company. From a buyer’s perspective, this makes total sense: loyalty of customers, suppliers and employees must move to the new owner for him/her to be successful.

But for you as a seller, it’s a very different perspective. Although it might be challenging to think about, it may still be a great option to consider.

Sales to third parties often bring the highest selling price. These buyers are motivated to own your Company. These reasons include adding a new series of complementary products or services, expanding market coverage, acquiring a customer or supplier relationship, buying technology. The list goes on. Rarely does a buyer not make changes to the operation. There may be consolidation of administration, sales and marketing or even production. The Company you created or grew may become unrecognizable. But the size of the purchase check may place those factors in the ‘who cares’ category.

Preparing your Company for sale is not difficult. It is comprised of several simple steps, many of which can be attacked at the same time. Many sellers create a sales packet with sections on everything from your finances to how you market. Evidence exists that buyers ranging from larger firms to the competitor next door close deals more quickly and closer to the original asking price when such a packet is available. You’ve addressed their questions proactively, just like you anticipate your customers’ needs proactively. Treating a buyer like a favored customer will accelerate the process. The goal is to receive as large a payment as possible, as quickly as possible.

When looking at your Company, think like a buyer not a seller. Why would you want to buy your Company? Even think about why you would not buy your Company: these are areas to fix.

This exercise has value whether you’re selling or not. It points out the strengths and weaknesses of your Company, areas to address even if you are not moving on. A SWOT analysis is another term for this – identifying your Strengths, Weaknesses, Opportunities and Threats.

The process focuses on improvements which lead to more sales and profits or a better way of getting things done. It shows where you need to focus to allow yourself to transition out.

Experts exist who can help make all this happen letting you continue to run your business.

The preceding information is a preview of our “Business Transition Planning: Maximize Your Legacy” booklet. Click here to request your copy.

Retaining Your Best Employees with Incentives

You’ve identified the key employees you can’t operate your business without, but you’re worried that they might not stick around. We’ve compiled a few ways you can help ensure they do.

The following information is a preview of our “Business Transition Planning: Maximizing Your Legacy” booklet. Click here to request your copy.


Bonuses are flexible. Bonuses are simple. Everybody understands bonuses.

Bonuses can be short-term, long-term, or both. Bonuses can be tied to goals: goals for the individual and goals for the company. Some companies provide a flat percentage of salary across the board regardless of individual performance. While it is important to reward everyone when the company does well, the superstars deserve and expect more. Conversely, a superstar should not be penalized when he does well, but the company overall is lagging. It’s not fair to an operations manager who can produce more than the sales area can sell.

Equity Plans

Stock options are key tools to incentivize employees. The employee ends up owning equity. This can be positive, but it may lead to issues. Owners can have a vote. They may become contentious and exercise minority shareholder (and like) lawsuits. As owners, they will now be subject to the terms of your shareholders’ agreement. If the shareholder/employee departs, you may need to buy out these shares.

Synthetic Equity Plans

Synthetic equity plans include phantom stock and stock appreciation rights. Both reward the holders of these with the increase in the value of the company. Neither transfers ownership interest.

These plans can work in conjunction with annual and longer-term bonuses. Synthetic equity plans reward key employees based on the performance of the company as a whole. They reward teamwork. Only if the team works together will the company grow. Your operations VP will work with the sales VP to design units that are more saleable. She won’t just produce units that are less costly or are quick to make.

The plans can be very flexible. They can be based on the “value” of a segment of the company, not just the company as a whole.

This concept of synthetic equity is important. Our objective is to keep control of the company in your hands, not to dilute it. Using real equity can create issues.

For more information on synthetic equity plans, visit the National Center for Employee Ownership, a membership group:

Employment Agreements

An employment agreement is a simple way to tell your employee you want him/her to stay on.  It will carry all the standard clauses including expected duties, compensation, bonus arrangements, stock options, synthetic equity, benefits, term, causes for termination, confidentiality, etc. This is a legal document, so an attorney is required to help set it up. But it gives peace of mind to key employees, especially in a family business.

Need more helpful information? Look for more great articles on our blog or give us a call.


Business Owner Transition Planning

Easier and Less Expensive Than Ever

Thanks to the Tax Cuts and Jobs Act signed into law on December 22, 2017, there has never been a better time to look at your transition planning.

The Act basically doubled the federal estate tax, gift tax and generation-skipping tax exemption to $11.2 million per person or $22.4 million for a married couple beginning in 2018.  What does this mean for you or your client?  If you’re thinking of transferring interests in your business through gifts, the threshold before you incur federal gift taxes is now very high.  (Keep in mind, several states still incur these taxes, often with lower exemptions).  This benefit is set to expire on December 31, 2025.  If a staged set of gifts is a possibility, starting now is best.

If you have a buy/sell agreement in place, in part, to help the surviving family members fund estate taxes, that need may be greatly reduced.  If you plan to fund estate taxes through insurance, you may require less coverage.  On the other hand, 2025 is not that far off.  If you reduce coverage now, you may need to increase it again when you are older.  (Premiums will most likely be higher).

Consulting with your tax advisor and other experts is a must.  Everyone’s situation is different, there is no one-size-fits-all answer.

Request a copy of our Booklet: “Business Transition Planning: Maximize Your Legacy” for answers to common questions and ideas on how to get started.