If you are planning to sell your company now or sometime in the future, a recent Forbes.com article advises that there are 3 strategies you should use to get as much cash out of your hard work in building the business as possible:
Pre-sale planning. Look for opportunities to increase the sale price of your company. The first step is having a current valuation of the business as well as financial statements prepared that accurately portray the value of the company. Consider reading the book “Built to Sell” by John Warrilow and taking the assessment at his site by the same name, http://www.BuilttoSell.com
Pre-sale tax planning. Examine your company’s tax situation and that of your family as well prior to any sale, then look for ways to minimize any taxes that could result. For example, you may want to restructure any assets not used in the business to be sold apart from the company or use them for other purposes. You should also look into the use of trusts to freeze the value of the business so that when it is sold, estate taxes will be less. If you are so inclined, charitable trusts can be used to eliminate capital gains taxes. And, you will want to consider, of course, whether you are selling assets or stock, which have different tax impacts.
Negotiate skillfully. All the planning you have done prior to the sale of your company will help you be a more skillful negotiator. Take the time to understand the motivations of the buyers, which can provide excellent insight you can use to your advantage when negotiating the highest possible price for your company.
Taking these three steps will help you position yourself to get the best price for your business and help you increase your family wealth.
If you’re a small or mid-size business owner and considering selling your business or want to ensure it’s prepared well for sale, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.