BUSINESS CONTINUATION PLANNING –
AN EARLY START MAY
HELP YOU SUCCEED
is a Financial Advisor with American Express Financial Advisors based in San
Francisco, California and can be reached at firstname.lastname@example.org
One of his specialties is
comprehensive financial planning for gay and lesbian individuals and couples.
Brandon Miller has a website that can
be found at http://gayfinancialadvisors.com/California.htm
of small businesses are often so busy that they rarely think about how or when
they should exit their venture — or how their operation would fare without
But the idea of you no longer being able, willing or
present to lead your business is worth contemplating. Planning ahead can help
you achieve many objectives — including increasing your eventual “cash
out,” passing the business to your heirs, going public and selling stock, or
just making sure the operation is liquidated in an orderly manner.
A variety of exit
options - The specific business continuation
strategy you choose depends on your objectives and the interests of your family,
partners (and their heirs) and employees. Your strategy may include:
Liquidation upon your departure -
This may be a simple, attractive option for consultants, professionals or
businesses in which the owner’s knowledge, skills or experience are the
operation’s core asset. With liquidation, though, you lose the ongoing source
of income, and some assets might sell for a fraction of their value as part of
an active business.
Passing it on to family members –
Although a common goal of many smaller business owners, family succession can be
complicated and requires careful planning. First you should assess your heirs’
interest and knowledge of the business and begin a thorough training process.
Next, also should consider the interests of heirs not involved in the business
and those of key employees. Finally, you can either transfer the business to
your heirs as a gift (in this case you won’t realize liquidity, and you will
need a detailed estate plan) or sell it, with your heirs borrowing the funds or
paying you in installments.
Sell to partners or employees - If
this is your goal, advanced planning is the key to a successful outcome. Whether
such a sale occurs due to your retirement, death or disability, a detailed
buy-sell agreement is essential to spell out:
who will buy and assume control of the
what the price will be or how the
business will be valued
how the purchase is to be funded (usually either through life
insurance, funds amassed earlier for this purpose, a loan or installment
payments to you or your heir)
who will receive the proceeds of the
how surviving partners and heirs are to
divide business control and assets
Sell to an outside party -
If no heirs, partners or employees want to take over your business, you may
determine it’s best to sell to an outside party. Potential buyers may include
competitors, other business owners who want to add to their existing enterprise
or people who simply want to purchase an existing business.
A reputable business broker can help you plan your eventual sale and also
recommend ways to make your business appealing to potential buyers. For example,
you may want to implement a clear management succession plan and ensure that
financial statements show strong cash flow and earnings growth.
A qualified financial advisor and your accountant can assist in valuing
your business for sale. You’ll need to take into account such factors as:
assets and liabilities
customer base and strength of
owner and employee wages, benefits and
Go public and offer stock -
Another way to sell your business is to go public and sell stock in the company.
This option may let you realize liquidity while retaining some involvement. Keep
in mind, however, that once your business is publicly owned, you are accountable
first to shareholders and legally must keep their interest at the forefront
rather than your own.
As with other exit options, preparing to eventually go public takes
long-term planning. Financial analysts and investors will scrutinize your
business, so you should focus on building a strong track record.
A part of your personal economy -
Your business is an integral component of your personal economy, so your
continuation strategy should mesh with your overall financial plan. A qualified
financial advisor can help you blend these two worlds together, helping you
achieve your professional and personal financial goals.
information is provided for informational purposes only. The information is
intended to be generic in nature and should not be applied or relied upon in any
particular situation without the advice of your tax, legal and/or your financial
advisor. The views expressed may not be suitable for every situation.
American Express Financial
Advisors Inc. Member
NASD. American Express Company is
separate from American Express Financial Advisors Inc. and is not a
Brandon Miller has a
website that can be found at http://gayfinancialadvisors.com/California.htm