Ownership Transfers to Third Parties
Step 1 - Identify Owner Objectives
Each Component of the Exit Plan relies on the owner’s objectives with respect to that Component and also propels
the business owner closer to achieving his or her overall Exit Planning objectives (to the extent that they are known).
Owner objectives in this Component may include restructuring the business in order to minimize taxes at its sale,
motivating employees to remain involved with the business through a transition to new ownership or organizing the
business’ internal operations to facilitate the sale process.
Step 2 - Identify Business and Professional Financial Resources
In addition to identifying what a business owner wants, it is equally important to determine what owners have —
the current value of the business and its current and projected cash flow. The owner and his or her advisors use current
business value and projected cash flow to predict the price and terms that may be attainable from a third party buyer
and to set the parameters of what the owner will and will not accept in the transaction. The owner must perform this
analysis in light of his or her personal non-business resources so that the after-tax proceeds of a sale of the business
do not fall short.
Component
Preparation for the sale of a business to a third party buyer and the completion of the transaction itself require
focus, planning and stamina. Many business owners do not realize the complexity and details involved in a third
party sale until they are surrounded by it wondering which way to turn. Taking appropriate steps before the business
goes on the market and conducting the sale process in an organized and efficient manner can reduce stress on both
the business owner and the business while maximizing the likelihood of success of the transaction on terms
satisfactory to the owner.
Implementation and Follow Through
The business owner and his or her advisors work together to design and finalize the Recommendations that will
drive the owner toward reaching his or her objectives. Once Recommendation details and decisions are complete, an
organized and systematic implementation of each Recommendation follows. Finally, they focus their attention on the
next Component that will fit into the owner’s comprehensive Exit Plan.
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