Personal Finance

Thursday, April 30, 2015

Getting Your Company Ready for Sale

Financial Planner, Mike Repak, discusses viable retirement solutions for business owners.


Planning the retirement for a business owner is significantly more complicated than planning the retirement of an employee. Where a retiring employee might only need to roll their 401(k) into an IRA or choose which form of pension to receive, the business owner may be counting on a liquidity event to fund his or her retirement. If that’s the case, much more advanced planning will be needed. Often the plan to sell the business brings up the question “What do I want the business to look like after I’m no longer a part of it?” In other words, is it important the business remain independent or would you consider selling it to a larger company or competitor?

If the goal is to remain independent, a critical piece of the puzzle will be figuring out who might purchase the business. If you plan to sell it to someone who works for you, that person will need to be on the payroll for a substantial period of time before the actual sale happens. If that person isn’t already working for you, you will need to give some serious thought into who you might hire to be the successor.

Of course valuing a business can be really tricky. As the business owner, you get advice from your accountant, attorney or other advisors, but ultimately the price at which the business sells will be determined during the negotiation phase. Consulting with a professional advisor can give you recommendations on how to make your business more appealing to a potential buyer, which could in turn increase your sales price. A review of your business by an outside expert can challenge you to rethink the way your business is operating today, and identify areas of improvement that can make it more attractive to a potential buyer.

The process of selling or transitioning your business to a new owner can take several years to fully implement. Starting too late or too close to when you actually want to leave can drastically reduce your options and likely, the quality of the outcome. For example, the person acquiring your business might want you to remain employed and active in the business for some time after the change in ownership to make sure the transition runs smoothly. Also, if the buyer senses the seller has an urgent desire to leave, he or she might make a low-ball offer in the hope of getting a bargain. Or, worse, some buyers (e.g., a local competitor) might decline to make an offer at all, reasoning that the business might close eventually and the customers might be available for free.

We have the tools and business advice needed to provide valuable input and insight to help create the right business retirement plan for you. Talk to your Janney Advisor today to learn more.

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Michael Repak
Vice President/Senior Estate Planner

Mike provides advice and guidance in all aspects of financial, tax, and estate planning issues. He earned his Bachelor’s degree from William Paterson University in Wayne, New Jersey, and has a Master’s degree from the University of Wisconsin in Madison, Wisconsin. He has a CPA/PFS credential, and Series 7 and 66 securities licenses. He received his J.D. from the University of Florida and his LL.M. in Tax Law from NYU.

He has been an adjunct professor in the MBA program at Temple University and is a sought-after speaker for professional conferences and events. He is also frequently featured as a Money Doctor on www.360financialliteracy.org, the public education site of the American Institute of Certified Public Accountants. Mr. Repak has served on several non-profit and civic boards, is a graduate of Leadership Philadelphia, and a member of the Union League of Philadelphia.


Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any taxrelated statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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