Your business planning, focus, and success has given you income, status, and lifestyle.  Yet many successful business owners fail the transition phase, also known as business exit planning. Failure to recognize or acknowledge the inevitable is bad business and has resulted in losing years of hard won equity value. Will you leave your wealth unprotected or poorly invested?

Most business owners give very little thought to transition goals. Often they are unaware of key business exit planning and investment options that can best serve your goals and reduce your risks. The many planning considerations can be daunting to dissect: from tax, legal, estate, valuation, deal structure, insurance, etc. The only effective way to manage this complexity is with a process. This will help you analyze your options and understand the right mix for your goals.

Business Valuation and Wealth Generation

A good starting point in the process is to have a business valuation performed. This can uncover ways to increase business value and determine what a real buyer will pay for your business. Internal and external buyers can mean different valuation standards apply, and that usually renders a wide range of values. A valuation will also help you evaluate viable financing options – and realize the risks you may face if you need to carry the note. A qualified appraiser can help you understand these differences and better inform your decisions, so you can fine tune your goals.

Knowing your business value, you can now inventory all your assets and make reasonable income projections. Does your asset base generate sustainable after-tax income and the lifestyle you are seeking? It’s a good idea to run several scenarios so you can understand the possible range of outcomes. Do you have an income gap or areas that need to be better protected?

Prioritize Your Goals

This exercise will further help you to you to fine tune goals – and categorize them by needs, wants, and wishes. Goals change as life happens; you may decide to alter your goals or choose other options. What risks can you afford? Are there risks you don’t want to take? Are there risks you need to make?

Business exit planning done right is a process that requires time and technical competence across disciplines. No one adviser can do it all. Therefore, it’s vital to have a lead adviser who can effectively work with your entire advisory team. It’s up to you to appoint a competent adviser who can guide the process for you. Be sure the advice you are given is transparent and objective and not driven only by a commission schedule or one adviser’s lone perspective. Your goals should drive the process.

Jerry Matecun helps business owners to discover key planning and investment considerations vital to build and protect the value of your business and personal assets.  For a no cost, confidential conversation regarding your business valuation and exit plans call or email Jerry at 949-273-4200, 616-499-2000, or jerry@compoundvalue.com

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