Exit Strategies Insights

Industry insights, knowledge base and announcements for business owners and professional advisors

Exit Planning Insights

Go on Vacation … An exit strategy for small business owners

Do you plan to sell your business in 1-3 years? 3-5 years? 5-10 years? If so, here’s a simple preparedness test. Take a vacation! Ask yourself, “What would happen to my business if I left for a 3-week vacation?”  Some scenarios: Business grinds to a halt.  Since you do most of the work yourself, when you take a vacation sales drop 50% or more. Outbound selling stops.  Like many business owners, you are the main …

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Can I Sell My Business (C Corp Stock) Tax Free?

In some cases yes!  Congress has long recognized that small businesses investment is an important driver of the U.S. economy.  Back in 1993, to encourage capital investment in small businesses, they developed a rule that eliminates federal income tax on some (later revised to all) of the gain on the sale of certain C Corporation stock issued after August 10, 1993. As M&A brokers, Exit Strategies’ advisors try to point out potential tax breaks to …

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May 10th Seminar: How to maximize the value of your business upon exit.

Are you starting to think about retirement, but don’t know how best to transition out of your business? Consider attending a free breakfast seminar hosted by Exit Strategies Group and Exchange Bank on how to maximize the value of your business upon exit. This 1-1/2 hour seminar will answer the following questions: What are the value drivers that determine how much my company is worth? What can I do to prepare my company for sale? …

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How Do I Sell My Personal Goodwill?

The concept of goodwill in a business sale is familiar to most business owners. The more the better, right? Personal goodwill (versus enterprise goodwill) on the other hand is less familiar, and trickier to deal with. If your company is structured as a C-Corporation, you should know about personal goodwill and how its existence could put more money in your pocket when it’s time to sell. Here’s how this works. The C-Corp Dilemma Sellers of C-Corps …

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What is my best exit option?

The answer to this question is different for every business owner depending on goals, facts and circumstances. When deciding the right way to exit business ownership, owners should understand and weigh all of their options. This article summarizes eight common exit options and their pros and cons. Some are more common than others. All options should be put on the table when selecting your exit path. Eight Common Exit Options Option 1.  Transfer to Family …

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Protect your Trade Name and Protect your Business Value

From my experience as an M&A Broker, I can tell you that your company’s trade name will be a valuable asset to most prospective buyers of your business.  Your trade name, which identifies your company’s brand and distinguishes its reputation with customers and suppliers, is worth strengthening and protecting if you plan to sell your company some day. It may surprise you that the name of your business, even if it’s not officially registered, receives some …

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Don’t Let Key Employees Hijack Your Exit Strategy

In building a successful company, owners usually invest in hiring and developing managers and key contributors that become vital to the company’s effective operations. These people are considered “key employees”. When the time comes for the owner to exit his or her business, these key employees are usually valuable “assets” in the eyes of potential buyers.  Unfortunately, if a business owner has failed to take certain steps, key employees can derail a successful sale or …

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Is Your Company an Employee Stock Ownership Plan (ESOP) Candidate?

Employee Stock Ownership Plans (ESOPs) have compelling competitive, financial and legacy benefits. For business owners weighing their exit options, a leveraged ESOP may be feasible if the owner, company and employees possess certain attributes: Owner Attributes Owns 30% or more of corporate stock Has a low basis in the stock Looking to reduce involvement in the company long term (5+ years) or shorter term if successor(s) are in place to take over Concerned with employee welfare …

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Four Questions Your Buy-Sell Agreement Should Answer

A buy-sell agreement is a common contract between shareholders that both restricts ownership and facilitates the transfer of shares in a closely-held company. The other shareholders or the company become the buyers (marketplace) for what would otherwise be highly illiquid stock. Every buy-sell agreement should answer four fundamental questions: 1. Who is the purchaser? Generally, buy-sell agreements take one of three approaches to determining who the purchaser will be: Redemption, Cross-Purchase or Hybrid. In a …

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Does My Buy-Sell Agreement Establish Value for Estate Purposes?

Buy-sell agreements that contain a clause that values stock at less than fair market value can be disregarded for tax purposes. It is important to consider the requirements of Internal Revenue Code (IRC) Section 2703 when developing an estate plan involving business interests in which 50% or more of the stock is family owned. Section 2703(a) states that a shareholder agreement (entered into after October 8, 1990) that allows for the acquisition or transfer of …

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