If I Sell, What Next?

One of the most important conversations we have with you, a business owner, when representing you to sell your business is, “What are your plans after you exit the business?”  You may be financially ready to sell your business, but are you emotionally ready?  It’s likely your business has been your focus for 30 or 40 years, and what comes next can be daunting. How will you keep busy? The earlier Touchstone has the conversation with you, the better.  The last thing any M&A advisory firm should want to do is push a client to sell when they are not ready.

Selling doesn’t have to mean an end, it can be a new beginning. We have had clients pursue their dreams of starting new businesses, travelling, volunteering, teaching and more. After putting in all the sweat equity, selling can be like a graduation. A reboot on life.

Timing

The timing of what comes next will depend on how the deal is structured. That’s our job to negotiate, just like with every part of a transaction. We negotiate if and how long the seller will remain after closing. You may want to stay on for 6 months, one year, or in some cases more. Buyers often welcome you to remain involved with the ‘Thought Leadership’ of a company, potentially on a Board of Directors or as a consultant. Your knowledge of the company, its clients and employees is valuable to new management. This can give you the relief of the day-to-day headaches of operations while letting you assist with the legacy of your company.  

Financial Considerations

We advise our clients to consult with their wealth manager and tax advisor throughout our process. We work closely with your wealth manager to help determine if the likely selling price of the business will support your lifestyle. Will you have enough money post transaction to move where you want to, take vacations, support the charities you like and so on? In addition, you may have been making budgeting choices for tax optimization that could result in new expenses falling into your personal budget after you exit the company. For example, expenses such automobiles, insurance, and medical care. Lastly don’t forget Uncle Sam, who is always a silent business partner who takes a share of the proceeds when selling depending on your entity structure. Your tax advisor will be consulted to assist with minimizing your tax liability. Optimizing the financial outcome of an exit should also include conversations with an experienced Trust and Estate attorney who can provide valuable advice on generation planning.

Family Considerations

We often hear “I am really talking to you because my wife says I need to be done.” Maybe it’s your kids or grandchildren that are encouraging you to exit. That’s great – they want to spend more time with you! Managing a company for your entire life has provided well for you and your family. A carefully planned exit is designed to give you more time to spend with your loved ones.  

If you happen to have family members that are involved in the business, selling the business does not mean that they need to be without a job. Just as your expertise is valued by the buyer, theirs will be as well. Each family business is different, and we can negotiate structures to provide the one that works best for you and your family. This is your legacy, and the transaction will be created to provide you with the exit that is optimal for you.

A successful business exit is an early and well-planned exit strategy. With Touchstone Advisors by your side, you can rest assured that you won’t leave any money on the table and our team of experts will work closely with you to develop an exit strategy that aligns with your financial, emotional and lifestyle goals and ensures a clear understanding of all transaction agreements.