What is the final step?
The last step is tying together the financial planning and estate planning of the seller and buyer. Make sure that everyone has a financial plan and that estate plans are in line with the sale. The sellers may want to take advantage of gifting or other techniques to transfer that business, so it is critical to look at the overall planning picture to ensure all bases are covered.
How can parents make sure their children are treated equally?
Parents need to figure out what they want to do in terms of equalization, but keep in mind that equal does not equate to fairness. An outside adviser can help you sort through the potential mine fields, ask questions, hold family meetings and help you create a family governance plan that outlines, ‘Here’s what it takes to become part of the business, here’s what it takes to govern this business and here’s what’s going to happen. Here’s our corporate succession plan, here’s how its going to work and here’s how we’re all going to act when the succession plan comes into play.’ It takes a good adviser to get to the bottom of what’s important to the parents and to all family members. That adviser will act as a quarterback, helping to set egos aside, working with the CPA, estate planner, attorney and other advisers to create a collaborative approach.
Planning should begin two to seven years before the owners plan to exit the business. If you’re building a salable asset and have value in the business, it doesn’t work to just walk away. Too many factors, such as estate taxes, capital gains taxes, banks and family dynamics come into play, and to maximize the value of your business and keep it on track after you leave it, you have to plan accordingly.
Keven Prather is a financial adviser specializing in exit and transition planning at Skylight Financial Group. Reach him at (216) 592-7314 or [email protected]. Keven Prather is a registered representative of and offers securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC. OSJ: 1660 W. 2nd St., Suite 850, Cleveland, OH 44113, (216) 621-5680. The views expressed are those of Keven Prather and not those of MML Investors Services, LLC or its affiliated companies. CRN201304-147470
