BUSINESS ADVISORY

TRANSITION PLANNING

We specialize in helping owners and founders of privately held companies identify, build and implement the best strategy for their situation. Since our founding, we have transitioned close to 1,000 private companies nationwide. The transition of your business can significantly impact your lifestyle, family, employees and community. Our experience and process enables you to determine the best course of action to meet your specific business and financial objectives. We have decades of experience helping business owners navigate the following types of transitions:

 

INTERNAL SALE

An external sale is the obvious selection if your main objective is to maximize value. However, if the non-financial aspects of your business such as legacy, employees or community take precedence over the maximum sale price, you may consider an internal sale and/or gift to family members or a sale to one or more key employees. The risks associated with an internal sale can be complex to navigate, but given enough time, a successful plan can be achieved. Here are a few critical decisions that need to be made to ensure a successful result:

 

Key Decisions:

  • How much do you need from the transaction?
  • How much is fair?
  • How much time is needed to develop and implement a strategy?
  • How will the sale be structured?
  • How will the transaction be financed?
  • What is the tax impact of the transaction?
  • What impact does the transaction have on available cash flow to the business and the new owner(s)?
  • Is the purchaser or purchasing group equipped to run the business when you are gone?
  • Is a Board of Directors or Advisory Group necessary to oversee the company? What is your role on the board?

 

RETENTION FOR FAMILY MEMBERS

In many cases, and often the most complex transition is when the family chooses to transfer to the next generation. This type of transition impacts the owner, the business, its employees, family members directly involved in the business and family members who are outside the business. We believe that to achieve a successful transition within the family, all parties need to benefit. The need to balance the objectives of the owner(s) with the needs of the business and other stakeholders is critical. Considering both the challenges and opportunities that are unique from an operational perspective enables the ownership group to create the most beneficial course of action for everyone effected by the transition. Here are a few critical decisions that need to be made to ensure a successful result:

 

Key Decisions:

  • What is my business worth?
  • Should I sell a minority or majority interest to family?
  • How much will I need to realize from the sale to ensure my financial security?
  • How much is fair?
  • How will the sale be structured?
  • What is the most tax efficient way to transfer stock?
  • How much time will I need to allow to ensure the transition is a success?
  • How will the employees handle the transition of ownership?
  • How much time is needed to develop and implement a strategy?
  • Is the purchaser or purchasing group equipped to run the business when I am gone?
  • How do I manage fair but not necessarily equal between compensation and ownership?
  • Is a Board of Directors or Advisory Group necessary to oversee the company?

 

Corporate Governance

Over 80 percent of all private companies are operating without a board of directors or advisory board. Odds are your competitors do not have one. Developing a board can give your company a distinct advantage over your competition; particularly companies looking for strategic, calculated growth. There is tremendous value in receiving objective, knowledgeable advice from outside advisors who share in the financial and/or equity growth of your business.

 

BOARD OF DIRECTORS

Board of Directors consists of members both inside and outside of the business. A functional board sets strategic direction, resolves conflicts, outlines goals and evaluates executive performance. Formal boards enable owners to have direct influence with the senior management team and hold them accountable for results.

 

ADVISORY BOARDS

Advisory Boards can provide many of the same benefits as a Board of Directors but with less formality, involvement and authority. They bring valuable skills, knowledge and experience at a fraction of the cost.

 

Benefits:

  • Unbiased outside perspectives on many issues.
  • Increased corporate accountability and discipline.
  • Enhanced Owner/CEO and management team effectiveness.
  • Greater credibility with investors, vendors and customers.
  • Help in avoiding costly mistakes.
  • A sounding board for evaluating new business ideas and opportunities.
  • Enhanced community and public relations.
  • Improved marketing results and effectiveness.
  • Strategic planning assistance and input.
  • Centers of influence for networking introductions, ex. potential customers, investors, vendors.
  • Help anticipating market changes and trends.
  • Crisis and transition leadership in the event of the death or resignation of the CEO.

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