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Business Owners / Exit Strategies / Planning

As a business owner, you have spent a considerable amount of your time working hard to grow your business and make it a success. We find that while many successful business owners are entrepreneurial and natural risk-takers, the wisest ones seldom enjoy taking risks when it comes to their personal financial planning. Business owners can face a unique set of challenges when it comes to financial plans and success. Some of these challenges include:

  • Investing in the business vs. saving for retirement

  • The impact of a disability or premature death in your business or family

  • Successfully transferring business ownership

  • Evaluating when to sell your business and for how much to ensure you receive full value

  • Analyzing the effectiveness of your buy-sell

  • Attracting and retaining high-quality employees

In addition, emergencies can happen in our personal lives that immediately affect our financial stability. This is especially true for business owners. In order to be prepared for the impact unexpected situations can have on your personal and business finances, you need to have a plan in place.

Acosta Wealth Management equips you with the tools to effectively manage your money and focus on profitability as a business owner. We examine and address problems that could be present in your current financial plan and set new goals to help you exit your business. Our professionals develop business exit strategies to help ensure your financial future is protected. Whether you are ready to retire or simply move on, our plans establish your exit goals and begin with the end.

Business Exit Strategies and Planning

An exit strategy is not the same as the sale of a business. It is a process, not an event. Since there are a number of potential methods for exiting a business, it all begins with knowing the options available to you. There comes a point in the lifecycle of any business when the owner no longer wants to, or is able to manage the firm. Since the timing of retirement, death or a disability is difficult to predict, it’s prudent to have a succession or transfer plan in place now to protect the value of your business, safeguard your personal financial well-being, and provide your business with leadership during a transition period.

Obtaining the right information, in a timely manner to make the best decisions with regard to your exit strategy, takes time.

Owners can establish the strategy that best meets their goals and protects their wealth once they follow the steps needed to determine the course they should set with their planning.

Our Exit Planning Process:

1. Establish Exit Goals - Measure Your Financial & Mental Readiness

  • Are you financially prepared for an exit from your business? If your personal wealth outside the business is not enough to take care of you in retirement, how can you retire?

  • Are you mentally prepared for an exit from your business? Being mentally prepared to leave your business may be the largest challenge that you face. If you are not mentally ready today to depart, it does not mean you should put off planning for your exit – in fact, just the opposite is true. Far too often business owners procrastinate planning because “I’m not ready”. By the time they are ready, frequently one or more potential exit paths have closed – a missed opportunity. The mental shift that needs to take place is learning to look at the business from the investment perspective in the market place, rather than the perspective of a job with perks – and this takes time, education and attention.

2. Identify the Type Exiting Owner You Most Resemble – 4 Types of Exiting Owners

  • Get-me-out-right-away-at-the-highest-price exiting owner.

  • Well-off-but-choose-to-work exiting owner.

  • Stay-and-grow-the-business exiting owner.

  • Rich-and-ready-to-go exiting owner.

3. Learn Your Exit Option & Understand the Value of the Option You Choose

  • Internal Exit Paths – Family Transfer, Management Buy-Out, Employee Stock Ownership Plan (ESOP).

  • External Exit Path – Private Equity Group Recap, Outright Sale.

  • Valuation – each exit path creates differing potential business values for a transfer. Taxation upon these transactions also can differ significantly, so understanding and balancing your value need with the exit path values on an after-tax basis is critical in choosing the optimal option for you.

4. Execute Your Exit Strategy Plan to Achieve Your Goals and Protect Your Wealth

When you consider how much wealth is at stake, it makes much more sense to create a professional advisory team, with an exit specialist managing the planning process. A good team consists of a number of players, each contributing to the overall execution of the exit strategy. Typically, some of the following would be included:

  • Attorney
  • Accountant
  • Financial Planner
  • Insurance Agent
  • M & A Broker
  • Valuation Specialist

Do you need business exit guidance? Take The Business Exit Readiness Index™ Report survey so we can better understand your needs and goals as an owner looking to exit your business.

When deciding to exit your business, it is crucial to have a financial blueprint. Some business professionals may be unsure of if they are ready to move on from their company. Ask yourself these questions to aid you in deciding whether or not it is time to leave your business:

  • How involved are you in day-to-day business operations?
  • Do you have a plan for how you will spend your leisure time or retirement?
  • Do you see your business as a return on invested capital or as the provider of your lifestyle?
  • Are you “addicted” to your business? For instance, will it be hard to give up control and pass it along to someone else?

Once you have asked yourself these questions, it is time to talk with your trusted financial advisor. We will review your specific situation and design a plan tailored to fit your unique needs depending on both business and personal aspects. The financial planners at Acosta Wealth Management help business owners take the next step in their life. We understand the challenges business owners face, and we have the experience to execute a successful financial plan that is designed to protect your wealth.

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