The ten steps that you should consider prior to selling your business

 In order to maximize your family wealth, from both an income tax and business sales price, there are many proactive tasks that you should consider undertaking.  One very important task is to discuss with your investment banker the wisdom of having an estate/asset protection plan in place prior to the time that you contemplate selling your business interests through the services of an investment banker.  We recommend that you employ the services of an investment banker that works in a multi-disciplinary team environment and understands the skills required of each member of the team.  Failure to consider the chronological aspects of the integrated estate planning, asset protection, success planning process may result in a significant loss of family wealth when you attempt to transfer part of your realized wealth to family members or when the proceeds obtained from the liquidity event are permanently included in your estate without protection from creditors.

An orderly and comprehensive planning process normally includes three major phases which we have termed assessment, planning, and implementation.  We recommend that you utilize a process similar to the following ten steps.

Assessment phase

The first step is to determine your financial philosophy and goals which may be based upon emotional, social and/or spiritual beliefs.  Your trusted advisor should assist you in deciding how your estate is to be distributed among family members, charities, employees, the government, or whether you desire to create a family legacy through the use of a multi-generational trust or a family foundation. 

The second step is to determine the amount of annual income that your family believes that they need for your retirement based upon your retirement lifestyle goals. 

The third step is to gather your legal and financial information in order to determine your current legal and financial status.

The fourth step is to determine whether or not the estimated future value of your estate is sufficient to sustain your desired retirement life style.  If the future value of your estate is sufficient, then the planning process should begin taking into account when you should sell your business. If the future value of your current estate is not sufficient to fund your desired retirement then you should reevaluate your desired retirement lifestyle or consider hiring professionals to assist in modifying your business strategies in a manner that will significantly increase entity profits and the resulting entity value.

Planning Phase

The fifth step is to establish a multidisciplinary team that includes an attorney, CPA, investment advisor, financial planner, valuation expert and an investment banking advisor, all considering the coordinating guidance of a comprehensive wealth counselor. 

The sixth step is to have a comprehensive and integrated appropriate estate and asset protection plan designed based upon the information gathered in steps 1 through 5.

Implementation Phase

The seventh step is to draft and execute the necessary legal documents that create any necessary trusts and/or new entities that will be utilized to transfer portions of your entity ownership interests to the appropriate trusts or individuals. 

The eighth step is to begin the process to prepare yours business for sale including obtaining a preliminary business valuation and an industry analysis; and identifying significant value drivers and important management team members. 

The ninth step, which is based upon your retirement goals, is to implement a business value enhancement program that is customized to your business based upon such factors as your industry, management philosophy and horizontal and/or vertical growth strategies.

The tenth step is to implement entity income tax savings strategies that are consistent with your exit strategy and retirement timeline goals.

Conclusion

In order for us provide suitable investment banking advisor services for our clients we recommend that you adhere to a chronological, yet flexible, planning process that takes into account the various professional disciplinary planning tools that place your estate in order and that maximize company value and your family wealth prior to planning for a partial or full liquidity event.  The McLean Group will work along side your current trusted advisors, and can assist in introducing you to possible additions to your multidisciplinary group of advisors when appropriate in order to assist you and your family through a similar comprehensive planning process that will place you on the path for an engagement with us as your investment banker.