Are you seeking a better work-life balance?
Is starting a new career of interest to you?
Are you searching for a new purpose and passion?
Would you like to retire in the next year?
There are so many reasons why business owners might choose to leave their business. These are just a few of the more common reasons for many owners.
The exit process for every owner is unique, but there are a handful of similarities that are beneficial for everyone to know.
We sat down with one of our consulting CFOs, Tom Hosepian, to learn more about the process he went through while transferring his business. These questions prompted him to look back and evaluate what he would have done differently.
Read the interview here:
What kind of process did you go through?
I had a business partner. We each owned 50% of the business. Once we incorporated, we immediately began working on a buy/sell agreement just in case one of us was unable or unwilling to continue in their management capacity. My interest in the business was transferred with the terms previously stated and agreed to in the buy/sell agreement.
Were there any setbacks you encountered during the process?
Having multiple shareholders always complicates issues. That is why it is crucial and best to have everything in writing by an attorney. Sometimes an owner’s needs may change which can drive their desire to change the terms of the transfer. In the end, both parties have to agree in order to make a change, otherwise, the original arrangement remains in place.
The exit process can take months, even years, from start to finish. What was your experience when transferring the business over?
Surprisingly, the transfer did not take long. For me, it was much like closing escrow on a house. There were a lot of papers to sign and file. Once that is completed, the title transfers and it’s done. No parade. You simply move on to the next phase of your life.
Were any other advisors involved during the process?
I can honestly say the ONLY advisor that I relied on was my wife. The decision would affect both of us and her advice and support was the basis of my decision. Once the decision was made I sought the advice of my attorney on the “how best to,” but never on the “whether to.”
Read more here: 4 Key Business Advisors Needed for Exit Planning
Looking back, is there anything you wish you had known before you transferred your business?
Yes: be realistic about your exit time frame goal and make sure the company can fund the exit within your expectations. Business conditions and unforeseen events can disrupt or accelerate the transfer time so plan ahead and make sure the transfer is funded as early as possible.
Is there anything you would have done differently?
As an owner your name becomes attached to a lot of bank accounts, vendor accounts, loans, financing, personal guarantees, tax liabilities, etc. This list grows over time and it is hard to remember all the places you maintain potential liability on behalf of the company.
When transferring the business it’s important to remove these ties and keeping a list as you go makes it a lot easier when the time comes. I did not think to do this and it made the transition that much more difficult.
If you are looking for assistance regarding the exit planning process, want to know the value of your business, or are questioning whether your business is equipped to survive your exit, contact us today.