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Business Succession Planning 102
Maximize the value received for the sale of your business by planning ahead how the transaction will be financed.
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OU ARE 100% GUAR ANTEED TO LEAVE your business at some point. A well-planned sale of your ownership will maximize the value transferred to you or your heirs and minimize the impact on your family, co-owners, employees, and customers.
M michael palermo
is an Asheville business lawyer with over 25 years’ experience.
However, a buyer showing up at the right time and with ready cash for that transition rarely happens. An integral part of any succession plan should therefore include the means to finance the transfer of ownership. As I wrote in last month’s Capital at Play column, “Business Succession Planning 101,” identifying the type of transition you may make lets you plan how to fund the sale. This article discusses the second part of your succession plan: how to get paid for selling your ownership in your business.
*** In the best instance, you’ll find a buyer ready to pay cash for your business when you’re ready to
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| March 2020
sell. That’s unlikely to happen, though. While the immediacy of your situation may require a quick sale on your end, a buyer won’t just fork over the asking price without going through a time-consuming due diligence and negotiation process. Especially as the sale price of the business increases, finding a buyer willing to hand over a half-million or more dollars takes months. Meanwhile, your business is under whatever immediate stress is causing you to sell—death, disability, divorce, etc.—making its value quickly decrease. In a cash- or buyer-financed sale, the simplest form of transition of ownership, the seller gets a big pile of money in the bank. If the sale is financed, the buyer has the benefit of having a professional appraise the soundness of the transaction. Banks and private