Spring Summer 2014 | BWD 13
2. Ensure that you’re personally and financially
prepared
How does the potential value of the business fit into your
personal and financial goals for retirement? What will
you need to support your desired lifestyle after you exit
the business? What resources do you have outside the
business? Will you need to continue working for a time
after you exit the business? The answers to these questions
determine whether the optimal exit involves a sale to a
third party, a management buyout or a transfer to family
members.
It’s also important to consider the timing of your exit. Will
you work until the traditional retirement age or do you
anticipate exiting the business earlier? Could health issues
force an earlier exit? How might market conditions affect
the value of your business at that time? What strategies
to minimize, defer or eliminate capital gains, estate and
income taxes will be considered?
If you plan to transfer the business to family members
by gift or bequest, be sure to consider the gift, estate and
income tax implications. There are a variety of techniques
available to generate personal income while transferring
the business in the most tax-efficient manner.
3. Plan for the “third act” of your life
Even if you’ve done all the right things to plan your exit,
it’s just as important to have a plan for what comes next
and to understand your expectations. According to a
recent industry study, 75 percent of business owners who
sold their businesses regretted the decision within 12
months.
A good tool for understanding your perceptions and
attitudes about retirement is the Exit Planning Institute’s
“Retirement Satisfaction Predictor,” which you can find at
rehmann.com/transition.
Transition planning has always been important, but in
today’s environment it’s particularly critical. Maintaining
your lifestyle in retirement while providing for your family
demands a structured, formalized approach.
Have a contingency plan
Ideally, you’ll transition the business in accordance with your plan.
But what if death, disability, divorce or some other event forces an
involuntary exit? To minimize risk to the business, it’s important to
have contingency plans in place, including key person insurance,
life insurance, buy-sell agreements, management succession plans
and so on.
Consult professionals
Transition planning is a very complex process. Consulting
experienced professionals is critical to maximize the chances of
an optimal outcome, provide an objective perspective on your
transition options and free up your time to work “in the business”
rather than “on the business.” We can help — reach out to your
Rehmann advisor today.
ABOUT THE AUTHORS
Mary Van Skiver is a Senior Manager at
Rehmann. She plays a team lead role
assisting businesses with design and
implementation of transition plans. She also
advises clients on a variety of HR strategies,
management and succession issues. Contact
her today at [email protected].
Heidi Bolger is a Principal at Rehmann.
She consults with businesses in the areas
of mergers and acquisitions, strategy,
succession planning, profit improvement
and valuation. Contact her today at
[email protected].