Investing in Your Future
Selling Your Closely Held BusinessOwning your own business can be a dream come true but, oftentimes, small business owners end up having to sell their company, for a variety of reasons. The sale could be planned or unexpected, so it's important to at least think about this process earlier rather than later, because there are a number of factors to consider once you have made the decision to sell your closely held business.
A big part of the sale process involves planning and advice. It is important to surround yourself with an experienced team of professionals who can assist you in the complex activities associated with the sale.
Each of these professionals will bring different skills to the table in order to deal with a variety of issues involved in a sale. Most likely, you will be working with your attorney on the legal structure of the transaction and with your accountant on the tax consequences of the sale. Also, you may want to work with a business valuation expert who can help you establish an asking price and evaluate any offers you may receive. In some cases, you may find advice from a small business investment banker helpful. They may be able to identify potential buyers and prepare the business for the sale. Also, you should work with your financial advisor who can help you understand the effects of the sale on your personal financial situation and create a plan for building properly diversified investment portfolio from the sale proceeds.
A comprehensive financial strategy can help you see the big picture of where you stand financially and also determine how much capital you may need to replace the income you are currently receiving from your business. Once you have a clear understanding of these needs, it may help you determine what the asking price should be for your business. In addition, your financial advisor can help you understand how much income you can realistically expect to generate from the sale of your business and what the most appropriate way to invest the proceeds might be. You'll want to have a plan together early on so that your money can begin working for you as soon as possible.
On another note, there may be assets in the business that can be used more effectively. For example, many businesses own substantial life insurance policies on key employees. If the business is sold, you should look into your options with regard to what you can do with these policies. You may not need the same amount of life insurance after the sale. A financial advisor can help you define your objectives, evaluate the existing policies and identify the most appropriate strategy for dealing with these assets.
If your business offers a qualified retirement plan, you may want to take a look at what you will do with your portion of the plan. Some business owners choose to leave their account in the company plan, but there may be advantages to "rolling" over the funds in their retirement plan into an IRA for future use.
The way you handle the sale of your business can have a huge impact on your quality of life in the future. By involving professionals early and taking the right steps, you'll be in a better position to meet your own individual financial objectives.
This article was written by Wachovia Securities and provided courtesy of Steve Zahorik, Financial Advisor, MBA, CRPC® in Greenwood Village at 303 850-7900.
Wachovia Securities is the trade name used by two separate, registered broker-dealers and nonbank affiliates of Wachovia Corporation providing certain retail securities brokerage services: Wachovia Securities, LLC Member, NYSE/SIPC, and Wachovia Securities Financial Network, LLC (WSFN), Member FINRA/SIPC.
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