Exiting Your Business, Protecting Your Wealth: A Strategic Guide for Owners and Their Advisors

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John Wiley & Sons, Oct 6, 2008 - Business & Economics - 238 pages
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EXITING YOUR BUSINESS, PROTECTING YOUR WEALTH

Exiting your business is likely one of the most important financial events of your life. As a business owner or entrepreneur who is looking to protect the illiquid wealth that has accumulated in your privately held business, you will face a number of obstacles in developing and executing an exit strategy plan that suits your needs.

Written by John Leonetti—a business owner, attorney, wealth manager, merger and acquisition associate, and fellow exiting business owner in his own right—Exiting Your Business, Protecting Your Wealth will guide you in thoughtfully planning out your business's exit by illustrating your exit options as well as helping you analyze your financial and mental readiness for your business exit. Providing a simple, step-by-step process that you can start using right away, this savvy guide reveals how to:

  • Set your exit goals

  • Determine if there is a financial gap you need to worry about

  • Decide if you are really ready to leave

  • Tell you what type of exiting owner you are

  • Illustrate your exit options

  • Measure the "range of values" for your business

  • Assemble your advisory team

  • Understand how taxes, deal structuring, and legal agreements will impact your exit

  • Establish a customized plan for your exit that protects your hard-earned wealth

An exit strategy is not the same as the sale of a business. This practical guide helps you understand the difference and offers a process that begins with examining your personal readiness for an exit and ways to protect your wealth, through building and executing a customized exit strategy plan. Easy to follow and essential for every business owner, Exiting Your Business, Protecting Your Wealth shows you a better way to establish an exit strategy plan that is aligned with what you would most like to achieve and in harmony with your goals.

 

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Contents

GETTING IN IS EASIER THAN GETTING OUT
ILL GET AROUND TO IT
STRUCTURE OF THE BOOK
REVIEW
BUSINESS OWNER MARKETPLACE
WRITE IT DOWN
ADJUSTMENTS TO YOUR BUSINESS
IS THERE A FINANCIAL GAP THAT YOU NEED TO ADDRESS?
REVIEW
BILLS THREE CHOICES
ISSUES SURROUNDING MANAGEMENT BUYOUTS AND GIFTING PROGRAMS
MANAGEMENT BUYOUTS
COMMON DENOMINATORS
LITTLE CASH AT CLOSING
DEFERRED PAYMENTS
ACCELERATING YOUR GROOMING PROCESS

DO YOU LIVE OUT OF YOUR BUSINESS?
INCOME REPLACEMENT AFTER THE EXIT
MEASURING THE GAP
SPECIAL NOTE ON FAMILY TRANSFERS
IN CLOSING
REVIEW
YOU ARE YOUR BUSINESS
ITS YOU AGAINST YOU
ARE YOU ADDICTED TO YOUR BUSINESS?
CLEAR THINKING
ANALYSIS AND INSIGHTS
WRITTEN EXIT STRATEGY PLAN
REVIEW
IDENTIFY YOUR READINESS LEARN YOUR EXIT OPTIONS
UNDERSTANDING VALUATION
WHICH QUADRANT ARE YOU IN?
OUR OWNER BILL
OVERALL REVIEW
EXIT OPTIONS AVAILABLE
BUSINESS VALUATION AND THE RANGE OF VALUES CONCEPT
FAIR MARKET VALUE STANDARD OF VALUATION
VALUE OF TRANSFERRING TO FINANCIAL BUYERS AND COMPETITORS
REVIEW
SELLING IS NOT THE ONLY EXIT OPTION BUT IT MAY BE FOR YOU
PROCESS OF SELLING A BUSINESS
THE ECONOMY MATTERS
HOW TO ACHIEVE MAXIMUM VALUE FROM THE SALE OF YOUR BUSINESS
VALUATION
IMPROVING JIMS OFFER
WHAT DID BILL DO RIGHT THIS TIME?
RESTATING EARNINGS TO REFLECT THE TRUE PROFITABILITY OF THE COMPANY
REVIEW
EXPLOSION OF PRIVATE EQUITY
CAPITAL FLOWS TOWARDS OPPORTUNITY
WHAT IS A RECAPITALIZATION?
VALUE MEASUREMENT
LIBERATOR OR OCCUPIER OF YOUR BUSINESS?
MARKET REALITIES AND YOUR EXIT STRATEGY PLANNING
REVIEW
USING AN ESOP IN YOUR PLANNING
ESOP BASICS
APPLICATION OF AN ESOP TO BILLS EXIT STRATEGY PLANNING
CUSTOMIZED EXIT STRATEGY USING AN ESOP
FAIR MARKET VALUE STANDARD
WHY ESOP PLANNING WORKS DESPITE THE LOWER INITIAL VALUE AND DISCOUNTS
ULTIMATE IMPASSE
EMPOWERING YOUR MANAGEMENT TEAM
BUSINESS AS COLLATERAL
LOW MENTAL READINESS
APPLICATION OF A MANAGEMENT BUYOUT TO BILLS SITUATION
REVIEW
EXECUTE YOUR ESTATE TAX PLAN NOT THE GOVERNMENTS
HIGH FINANCIAL READINESS
NO CASH FOR YOUR SHARES
GIFTING TO FAMILY EMPLOYEES AND CHARITIES
LIFETIME EXCLUSION
APPLICATION TO OUR EXITING OWNER BILL
REVIEW OF PARTS I AND II
WILL UNCLE SAM KILL YOUR EXIT STRATEGY PLAN?
CASE STUDY
MORE THOUGHTS ON TAXES AND DEAL STRUCTURING
DEFERRED PAYMENTS AS A RESULT OF BUYER PROTECTION
A NOTE ON GOODWILL
THE GOVERNMENT HAS AN ESTATE PLAN FOR YOU YOU PROBABLY WONT LIKE IT
THE BASICS
STATE EXCLUSION AMOUNTS
TOO MANY INCOMPLETE PLANS
BUSINESS VALUATION
WHAT DOES ALL THIS HAVE TO DO WITH EXIT STRATEGY PLANNING?
LIFETIME TRANSFER BY GIFT
LETTER OF INTENT
PURCHASE AND SALE AGREEMENT
NONCOMPETE AGREEMENT
SELLER FINANCING AGREEMENTS
EARNOUT AGREEMENTS
PRACTICAL TIP ON CHOOSING LEGAL COUNSEL
FIND EXPERIENCED EXIT ADVISORS
WHO DO YOU NEED ON THE ADVISORY TEAM?
WHOSE AGENDA RULES?
TEAM MEETINGS
ASSIGN A QUARTERBACK
REVIEW
FOLLOW THE STEPS
STEP 1 PLANNING THE EXITBILL WRITES DOWN HIS EXIT GOALS
STEP 2 FINANCIAL AND MENTAL READINESS
STEP 4 LEARN AND CHOOSE YOUR OPTIMAL EXIT OPTION
STEP 5 UNDERSTAND THE VALUE OF THE OPTIONS YOU CHOOSE
CONCLUSION
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About the author (2008)

John M. Leonetti, CFP, CM&AA, is the owner of Pinnacle Equity Solutions, an exit strategies firm specializing in exit strategy design and execution services to advisors and their privately held business owners. In addition, he is the former owner of Beacon Hill Equity Group, an advisory business that provided comprehensive exit strategy planning and investment advisory services to high-net-worth business owners (he followed his own instructions in successfully exiting that business). He also teaches private finance to MBA students as an adjunct professor at Suffolk University; has been a financial consultant with Smith Barney; a financial advisor with Merrill Lynch Pierce, Fenner & Smith; a mergers and acquisitions associate; and a manager in his family business.

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