Newspaper article The Record (Bergen County, NJ)

What to Consider before Selling a Business

Newspaper article The Record (Bergen County, NJ)

What to Consider before Selling a Business

Article excerpt

Q: I've owned a manufacturing business in New Jersey for 20 years, and now that I'm 68 and my kids are off on their own, I'm thinking of selling the business. What do I need to consider?

While each situation is different, three things apply to nearly every owner. Perhaps most importantly, you need to recognize the tremendous impact this transition will have on you, your loved ones and your company's stakeholders (employees, vendors, customers). This is a complex change, and focusing solely on the quantitative aspects can have disastrous long-term effects.

1. Find wise counsel

First, work with someone to counsel you on the management of these simultaneous changes. They may come in the form of a CPA, exit planner, attorney, financial planner and/or investment banker. Their technical expertise is not as important as your ability to relate to them and receive advice in the qualitative aspects. If you don't already have such an adviser(s) as part of your team, ask friends and family for referrals. There are professionals that identify themselves (as I do) as exit planners who tend to be dedicated to helping owners maximize their transition in both a monetary and mental outcome.

2. Know your number

Second, understand how much money you'll need to achieve financial security. That requires you to know how much you have (most people have a good handle on this), how much you intend to spend in retirement (this requires a little work) and some projections for what your asset allocation (e.g., stocks versus bonds) and location (e.g., IRA, annuity, etc.) needs to be to meet your needs. Most exit planners and financial planners are equipped to help owners answer these questions.

A big part of your financial picture is likely the value of your company. As such, get a clear understanding of what your business is worth now and what that would net to you after taxes in a transaction. …

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