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"As much as you might love running your business, you must have an end-goal in the plan. At the very least, an exit strategy keeps you from turning your business into a glorified job – working from home, but with longer hours” - Kevin Donaldson |
(303) 495-7578
Business Exit Planning
Whether Planned or Unplanned – You Need a "Plan"
Knowing how you will exit your business means knowing how you want to realize the value you’ve built in your business over what could be a lifetime of work.
But protecting your business value also means having a Business Succession Plan in the event of death or disability.
We prepare your company for the sale of your interest, sale of the company or even an IPO. We design and draft the necessary corporate documentation including contracts, buy-sell agreements and golden parachute plans. Our buy-sell agreements assure business continuity and lower the risk of conflict between remaining shareholders and the estate of a departed shareholder.
We define the necessary budget for insurance and/or reserve funding vehicles to guarantee sufficient liquidity to fund a voluntary or involuntary exit event.
We integrate personal wealth succession and asset protection planning into the business exit planning.
But protecting your business value also means having a Business Succession Plan in the event of death or disability.
We prepare your company for the sale of your interest, sale of the company or even an IPO. We design and draft the necessary corporate documentation including contracts, buy-sell agreements and golden parachute plans. Our buy-sell agreements assure business continuity and lower the risk of conflict between remaining shareholders and the estate of a departed shareholder.
We define the necessary budget for insurance and/or reserve funding vehicles to guarantee sufficient liquidity to fund a voluntary or involuntary exit event.
We integrate personal wealth succession and asset protection planning into the business exit planning.
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Selling Your BusinessLeave On Your Terms
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You've decided to sell your business and move on to the next chapter in your life. Now you have to get your business ready to sell and structure the plan while avoiding excessive liabilities, taxes and conflict.
Options to Exit Your Business
Liquidation
This is the close shop and sell all the assets exit strategy. For small businesses, especially those that are dependent on the performance of a single individual, liquidation is sometimes the only option as there's really nothing else to sell.
Liquidation Over Time
In this exit strategy scenario, the owner(s) extracts most or all the profits out of the business over time (before eventually selling or closing the business), rather than reinvesting them in the company for expansion.
Keep Your Business in the Family
The dream of many small business owners, keeping your business in the family ensures that your legacy lives on and provides a living for your heirs.
Sell Your Business to Managers and/or Employees
Current employees and/or managers may be interested in buying your business.
Sell the Business in the Open Market
This is the most popular exit strategy option for small businesses. At a certain point in time, often when business owners are ready to retire, they put the business up for sale for a certain price — and hopefully walks away with the amount of money they wanted to get for it.
Sell to Another Business
Positioning your small business to be a desirable acquisition can be very profitable. Businesses buy other businesses for all kinds of reasons, such as using a new acquisition as a quick path to expansion, realizing synergies from complementary business activities or simply buying out (and getting rid of) the competition.
The IPO (Initial Public Offering)
While not suitable for all small businesses, the IPO can be a viable exit strategy for large established business.
This is the close shop and sell all the assets exit strategy. For small businesses, especially those that are dependent on the performance of a single individual, liquidation is sometimes the only option as there's really nothing else to sell.
Liquidation Over Time
In this exit strategy scenario, the owner(s) extracts most or all the profits out of the business over time (before eventually selling or closing the business), rather than reinvesting them in the company for expansion.
Keep Your Business in the Family
The dream of many small business owners, keeping your business in the family ensures that your legacy lives on and provides a living for your heirs.
Sell Your Business to Managers and/or Employees
Current employees and/or managers may be interested in buying your business.
Sell the Business in the Open Market
This is the most popular exit strategy option for small businesses. At a certain point in time, often when business owners are ready to retire, they put the business up for sale for a certain price — and hopefully walks away with the amount of money they wanted to get for it.
Sell to Another Business
Positioning your small business to be a desirable acquisition can be very profitable. Businesses buy other businesses for all kinds of reasons, such as using a new acquisition as a quick path to expansion, realizing synergies from complementary business activities or simply buying out (and getting rid of) the competition.
The IPO (Initial Public Offering)
While not suitable for all small businesses, the IPO can be a viable exit strategy for large established business.
Business
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Unleash the power of business continuity
by making the right choices today
by making the right choices today
What Is a Buy-Sell Agreement?
A buy-sell agreement is a legally binding contract that stipulates how a partner's share of a business may be reassigned if that partner dies or otherwise leaves the business. Most often, the buy and sell agreement stipulates that the available share be sold to the remaining partners or to the partnership.
The buy-sell agreement is also called a buyout agreement, a business will, or a business prenup.
The buy sell agreement is normally a component of a Business Succession Plan.
Read more at Strategies for Buy-Sell Agreements using insurance.
How does a Buy-Sell Agreement Work?
Buy-sell agreements are commonly used by sole proprietorships, partnerships and closed corporations in an attempt to smooth transitions in ownership when each partner dies, retires or decides to exit the business.
The buy-sell agreement requires that the business share be sold to the company or the remaining members of the business according to a predetermined formula.
In the case of the death of a partner, the estate must agree to sell.
Understanding Buy-Sell Agreements
There are two common forms of agreements:
Some partners opt for a mix of the two, with some portions available for purchase by individual partners and the remainder bought by the partnership. In order to ensure that funds are available, partners in a business commonly purchase life insurance policies on the other partners. In the event of a death, the proceeds from the policy will be used towards the purchase of the deceased's business interest.
When a sole proprietor dies, a key employee may be designated as the buyer or successor.
Learn more about using life insurance to fund your buy sell.
Key Considerations in Buy-Sell Agreements
A buy-sell agreement is a legally binding contract that stipulates how a partner's share of a business may be reassigned if that partner dies or otherwise leaves the business. Most often, the buy and sell agreement stipulates that the available share be sold to the remaining partners or to the partnership.
The buy-sell agreement is also called a buyout agreement, a business will, or a business prenup.
The buy sell agreement is normally a component of a Business Succession Plan.
Read more at Strategies for Buy-Sell Agreements using insurance.
How does a Buy-Sell Agreement Work?
Buy-sell agreements are commonly used by sole proprietorships, partnerships and closed corporations in an attempt to smooth transitions in ownership when each partner dies, retires or decides to exit the business.
The buy-sell agreement requires that the business share be sold to the company or the remaining members of the business according to a predetermined formula.
In the case of the death of a partner, the estate must agree to sell.
Understanding Buy-Sell Agreements
There are two common forms of agreements:
- In a cross-purchase agreement, the remaining owners purchase the share of the business that is for sale.
- In a redemption agreement, the business entity buys the share of the business.
Some partners opt for a mix of the two, with some portions available for purchase by individual partners and the remainder bought by the partnership. In order to ensure that funds are available, partners in a business commonly purchase life insurance policies on the other partners. In the event of a death, the proceeds from the policy will be used towards the purchase of the deceased's business interest.
When a sole proprietor dies, a key employee may be designated as the buyer or successor.
Learn more about using life insurance to fund your buy sell.
Key Considerations in Buy-Sell Agreements
- Buy-sell agreements are designed to help partners manage potentially difficult situations in ways that protect the business and their own personal and family interests. For example, the agreement can restrict owners from selling their interests to outside investors without approval from the remaining owners. Similar protection can be provided in the event of a partner's death.
- A typical agreement might stipulate that a deceased partner's interest be sold back to the business or remaining owners. This prevents the estate from selling the interest to an outsider.
- In addition to controlling ownership of the business, buy-sell agreements spell out the means to be used in assessing the value of a partner's share. This can have uses outside the question of buying and selling shares. For example, if there is a dispute among owners about the value of the company or of a partner's interest, the valuation methods included in the buy and sell agreement would be used.
What We Do For You
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We engineer buy-sell agreements that stipulate
how a partner's share of a business may be transferred in the event of the partner's death or departure. We insert the necessary legal structures into your cooperate formalities to provide continued leadership. We establish a method for determining a business' value annually. We review and implement funding structures. |
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