To help our clients create a successful exit strategy, we focus more on their personal and family considerations than on tax issues. We work hard to help them be successful. We manage the tax and accounting compliance issues. We will refer them to outside advisors when necessary.
Outside of their own family, we probably know the most about their business. In addition to helping them get focused on building their empire, we can help them move their business and wealth through the family. If we can help them create an exit strategy, we add great value.
My colleagues and I met recently with one client who had built her business for a number of years and was ready to leave it.
She believed she could sell it and receive $750,000 as a net pay out. She wanted us to help take away the problems of running the business day-to-day and ensure she would have the $750,000. We spent some time ascertaining the motivation for the sale. She was clearly afraid to bring in people to help her run the business and wanted to ensure that her capital didn't disappear.
In typical entrepreneurial fashion, she was burned out. Her financial results for the last five years had been improving and the future looked pretty bright, though there were issues on the horizon that could throw the business off track - typical for anyone in business, including accountants.
We worked with her and created a plan that, over the next two-and-a-half years, would take the $750,000 out of the business and create savings through a combined financing and investing strategy, using the business and a holding company. Once we presented this plan to our client, she quickly understood she could have her $750,000 and still have her business investment.
This moved her to a position of thinking strategically, and we are now working with her to find ways of making the business more effective by building a management team that is focusing on new products.
This is all possible because she now feels she has an exit strategy and, with that in hand, is happy to continue building the business.
Creating an effective exit strategy, however, is much more than estate planning, making use of capital gains exemptions and transferring growth to the next generation. It must ensure that the owners have sufficient wealth outside the business so they can afford to retire. In addition, the management of the business has to be strong and there must be ways of resolving conflicts.
Creating an exit strategy is not a 'tax-centric' process; it is about helping the entrepreneur see what can be done and helping him or her find the energy to deal with a very difficult area. We may need to involve lawyers, family consultants, insurance agents and, in certain circumstances, the franchiser.
An exit strategy allows the transition of a family business, if that is what's right for the family. This lets the entrepreneur stay connected to the business longer, and can provide significant satisfaction once the tough issues are addressed.
We have found that great value has been added to our client services when we have helped entrepreneurs address the question of exit strategy. We are adding invaluably to their family wealth by helping to create the strategy, communicating this with the family and showing leadership in managing the family wealth base.
Success is achieved through an integrated approach that is family-focused rather than tax-focused. While this type of issue involves time and money, the benefits are long lasting.
To find out more about how The SuccessCare® Program can help you prepare for the future, contact Daphne McGuffin at (800) 598-6400 or click here to send her an email message.