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How To Sell Your Business: Three Things To Consider As You Plan For Your Next Chapter

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You’ve spent years investing your time and energy into growing a successful business, but feel ready for the next step. Selling your business can seem daunting -- there are certainly many factors to consider when it comes to maximizing both short-term and long-term financial benefits of the sale. That’s why it’s important to gather a trusted team of professionals to help guide you through the process. We’ve rounded up three of the most important big picture factors to consider as you plan to sell your business:

1. Identify your team.
Who will be helping you maximize the sale of your business? There are many different professionals who can lend their expertise in order to make the sale successful -- you’ll likely need help planning for taxes, your estate, investments, and more.

Once you determine your team, you also need to decide on your level of involvement. Will you make introductions and then step back to let the different members do their respective work and coordinate with each other when necessary? Or do you prefer to be more involved and serve as the point person connecting each professional?

2. Establish your source of income.
How will you optimize cash flow after the sale? Until now, your income has come from your business. It’s important to consider how you’ll turn the after-tax proceeds of the sale into future cash flow to support the lifestyle you’re accustomed to.

For example, there are considerable tax savings when you fulfill charitable intent as part of the sale of your business. If you give company stock to charity prior to the sale, you avoid gain on the stock AND receive a tax deduction. The tax savings on this strategy can be significant!  

Ultimately, your financial advisor can help you plan for tax savings, understand the bottom line proceeds you’ll get from the sale, and help you maximize your after-tax proceeds so you can maintain a comfortable lifestyle in the years to come. 

3. Determine what this sale means for your family.
How will your family be affected by the sale of your business? If you have a child or another family member working for the business, what will happen to them? How much do you want them to know about the details of the sale? Will you modify your estate plans for an equitable inheritance between children that worked in the business and those that didn’t?

It’s important to think through questions like these ahead of time in order to ensure a smooth transition for your family. 

Now that we’ve identified some of the big picture items to consider as you determine how to sell your business, here’s how a financial advisor can help you throughout the process:

1.  They can help you cut through noise.
A skilled financial advisor can help you reduce the overwhelming amount of options available to you during the sale of your business. They have a thorough understanding of your personal finances, and are ready and able to factor in how the sale of your business will affect your financial future. They’ll help you clarify your goals and expectations after the sale, then identify pros and cons of different options to enable you to make the ultimate decision on the best path to take during the sale.

2. They can help you create and communicate a plan for your family.
Your financial advisor can help you understand and integrate all the different components of the sale of your business (cash flow, estate planning, etc.) into a comprehensive picture. This will help you determine how the technical aspects of the sale of your business will affect your family going forward.

Then, your financial advisor can help you communicate the details to affected family members. You don’t have to share every detail of the sale with every family member, but having a communication plan in place will help ensure you provide pertinent details with those involved.

3. They can help you anticipate and prepare for challenges.
It’s easy to get caught up in the technical aspects of selling your business. There’s so much to plan for and consider, even with your trusted team of experts helping you along the way. However, it can be easy to overlook the emotional side of selling your business.

Even if you’re ready to sell, it can be difficult to transition out of owning a business you’ve poured yourself into. An experienced financial advisor can share examples of what clients in similar positions have done, the emotional challenges those clients faced, and alternatives the clients created to find fulfillment after the sale of their business. This can help you consider the best ways to plan for and spend your time after the sale (think charity work, joining boards of different companies, traveling, etc.), and your financial advisor can help to ensure you have a financial plan in place to support your new lifestyle.

Teaming up with a financial advisor as you sell your business will help you cut through the overwhelm and create a smart plan for you and your family’s financial future. Here’s why you should partner with Foster & Motley:

1. We’re experienced.
We manage over a billion and half dollars in assets for over 600 families. Our advisors have had experience with clients going through this process, which means they’re ready and able to help you understand how to sell your business with a solid plan for your financial future.

2. We’re credentialed.
Our team carries the highest designations in our industry, including CFA®, CPA, CFP®, and more. These credentials require continuing education to maintain, which means we stay current with the best training in order to give you the best advice.

3. We’re personalized.
Every client at Foster & Motley has both a dedicated financial planner and an investment manager. While your financial planner helps you with the sale of your business, your investment manager will continue to monitor and balance your investment portfolio.

Plus, our client to advisor ratio 20:1, which is nearly twice as good as the industry average (39:1). That means you’ll be working with people who have the time and energy to focus on your unique financial needs.

Ultimately, taking a careful, considered approach as you determine how to sell your business will help set you and your family up for long term success. Your financial advisor can help you cut through the overwhelm, clarify and plan for your financial goals, create and communicate your plan to your family, and anticipate and overcome challenges throughout the process. 

If you would like to learn more about how Foster & Motley can help you understand how to sell your business and plan for your financial future, contact us today.