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Preparing to Sell Your Business

Preparing to Sell Your Business

Do you have a strategy to follow?


Provided by PlanningWorks


Have you created a company that someone will want to buy? Your children won’t necessarily want to take over your business, so an exit strategy is essential to getting the outcome you want. You must prepare your firm for the transition – and you must be prepared as well.


When should the planning begin? Think five years away from the date of sale – at least. You could even start ten years before.


Readying yourself. Have you thought about what your life will be like after selling the business? If you have what amounts to a lifestyle company, to what degree has it paid your personal expenses? Can you arrange new income streams to replace the business income? A needs analysis may help you estimate how much money you will need to keep living well.


Readying the business. Look at your company and its immediate rivals. How attractive is it in comparison? What do you think it is worth?


What kind of unique selling proposition (USP) has your business developed? Has the service and performance of your employees strengthened your USP, or weakened it? Is your customer base growing, or stagnant? Does your online presence need a facelift? Do your financial systems need improving? Make a to-do list of some potential business upgrades and schedule their implementation.


What would a buyer want most when purchasing a business in your industry? Strong potential for further growth? Superb profits? Significant working capital that converts to cash in reasonable time? Freedom from having to make new capital investments? In addition to determining this, you will want to figure out the strategic value of your business with respect to a particular buyer, not simply the stand-alone value.


Marketing & preparing your company for sale. Who are you going to market to – a strategic buyer or a financial buyer? Do you think it would be better to sell your company to a major player in your industry, an up-and-comer, or even an old friend? Would a private equity firm be intrigued? Would a foreign buyer be a better bet? Your marketing strategy should be strong enough to attract multiple offers, whether pursuant to an asset sale or a share sale.


Dealing with the taxes. What will the tax impact of the sale be, and to what degree can you reduce it? Would changing the business structure help?


Negotiating the sale. If you use a business broker, use a properly licensed one (if you don’t, you may be inviting regulatory risks depending on your industry) and certify that he or she really wants to see you get a good deal (as opposed to just closing any deal). Set a sensible floor price, and walk away if an offer comes in beneath it; a pause after the receipt of a lowball offer sends the wrong message.


If you want to sell a company and start up another in the same industry, the buyer may demand that you hammer out a non-compete agreement, stating that you will not start a company in industry A, B, or C (or in your geographic region) within the next 5 or 10 years. Some states permit non-compete agreements and others prohibit them (most notably California).1


You might be able to convince the buyer to accept a non-solicitation agreement instead. These agreements promise that you won’t raid your old client base or hire your former employees as you build your new business, or alternately that your new firm won’t sell specific products that the business you sold still sells.


The prospective buyer may suggest an earn-out to you. Earn-outs are irritating conditions of sale in which the buyer links some of the seller’s eventual compensation to the business reaching certain financial milestones in the future. Earn-outs amount to stealth non-compete agreements, as they discourage a seller from remaining in the same industry. An earn-out might be acceptable if the remaining compensation comes to 10% or less of the sale price, or if bonuses can be arranged for you should the business perform exceptionally well under new ownership in the near term.


An extensively detailed, non-binding term sheet is critical in a negotiation. It can go on for several pages if needed, and it can serve as a precise cue sheet for any attorneys hired to write up the final sale agreement.


Handling change. You may want (or need) to put someone else in charge of things during the ownership transition. In addition to being a good manager, that person needs to care about your clients/customers as much as you do and uphold the values with which you started the company. That is non-negotiable.


Selling a business is a big effort, but a necessary one. Turn to a financial or tax professional to help you plan for the sale and the transition.


PlanningWorks may be reached at 512 498-7526 or

Listen Up, Advisors: Only Fire Clients When It Makes Sense

“Out of economic necessity, owners who want to grow their smaller firms need to take almost every new client who comes in the door. But once their firm is positioned to grow and starts to take off, it’s time to start weeding out those clients who are holding them back.”

Click here to read more:

Taking Control

Taking control of what you OWN in your woman-owned business is a priority. I understand, I am one.

Here's how! - View the video links below.  
Plan FIRST because PlanningWorks.

Please feel free to reach out to me or my team.

Lisa Allen, Co-Owner/Partner
PlanningWorks, Inc.

Click "play" below to view: Women

Click "play" below to view: What's In a Number

Value of Key Employee Insurance

The Value of Key Employee Insurance

Can your small business risk not having it?


Provided by PlanningWorks


What kind of financial loss would your business face without its key employees? They are worth more than their salaries – their performance, professionalism and character make your company what it is, and provide the stability and predictability you need to realize a profit.


Because of this reality, wise businesses owners take a look at key employee insurance. 


Aren’t the premiums for key employee insurance sizable? Not necessarily. In fact, they may seem profoundly insignificant compared to the financial hit your company could take without a key worker.

Retirement Plan Solutions for Small Business Owners



The SEP, the SIMPLE IRA, and more.


provided by PlanningWorks

What options do hands-on owner-operators have? If you have a small company and want a retirement program, you want to consider these plan choices.

The SIMPLE IRA. These plans are very easy to create, and they have very low administrative costs and no annual IRS reporting requirements. You set up traditional IRAs for each eligible employee; they can contribute to the IRA on a tax-deferred basis (via payroll deductions, and you can either match the contributions of plan participants or contribute a fixed percentage of all eligible employees’ pay. The employees own the money in their IRAs.1,2

The SEP. A Simplified Employee Pension plan lets you make contributions toward your retirement and your employees’ retirements. (You can even have a SEP and another kind of retirement plan at your business simultaneously.) A SEP allows business owners annual tax-deductible contributions equal to 25% of your compensation (if you have a corporation) or 20% of self-employment income (for a sole proprietor).3,4

The Cross Purchase Buy-Sell Agreement


Taking Care of Your Business After You’re Gone


Provided by PlanningWorks

Business owners are builders. They spend their lives building a business that provides goods and services to their clients and provides themselves a living. But nothing can tear down that lifetime work faster than their own death, or the death of a business partner. Often, much of the value of a business dies with the owner.

Each business encounters different problems. The questions facing a sole proprietor are two-fold. First, if he or she dies, how can the heirs continue the business or keep from selling the business at fire sale prices? The executor of the estate can continue the business, but must find someone willing to run it. They can sell the business, if the heirs wish, but must find a buyer. This is made harder by the fact that any potential buyers will be in a better negotiating position, knowing the business is becoming less valuable with each passing day following the owner's death. Also, the heirs may be in disagreement over what to do with the business. Some may want to keep the business, while others want to cash out. If the business is kept running by some heirs, those wanting out would need to be compensated. If the cash to do this can't be found, this could potentially force a liquidation of the business.

The Value of Money Management



There are compelling reasons why advisors suggest third-party asset managers.


Presented by PlanningWorks


Why do advisors "hire out" the management of portfolios? Some investors are puzzled when financial services professionals recommend third-party asset managers to supervise their portfolios. Why would they recommend turning over the active management of the portfolio to someone else?



It may be the right thing to do. When this suggestion comes up, it isn’t because the financial advisor wants to retreat from responsibility. It is actually made in the best interest of the investor. The portfolio management capability and resources of a single financial professional or small financial consulting group can pale in comparison to what an outside money manager might provide.


Annual Financial Check-Up

The Annual Financial Check-Up

Don’t ignore it. Here’s why.


Presented by PlanningWorks


Here’s the scenario … you get a card in the mail, one of those little reminders that tells you it’s time for your annual financial checkup. Your reaction: I’ll take care of that later. Here’s why you should look forward to it.


Why do I need an annual review? Because things change, and during the course of the last 12 months, you may have … changed jobs, made major purchases, welcomed a new child, retired, bought or sold a residence, decided upon new goals. These developments can change your financial objectives. Also, it is just sensible to measure your financial progress. If you are not making progress in accumulating assets, or if you are assuming too much risk as a result of your current portfolio or financial decisions, it’s time for change.


The annual review is a “deep breath” where you can get away from daily distractions and think clearly about financial planning.

PlanningWorks "Fall Economic Kick-off"

PlanningWorks "Fall Economic Kick-off"

Click here to see slides: Fall Economic Kick-off Slides

Real data and great discussion from our "Fall Economic Kick-off" at Maggiano's (plus a surprise visit by Carnac the Magnificent and Ed McMahon!) - click below for the slides.

Please call our office to discuss the info with Lisa or Mikiel.

The Nebraska 529 Plan

The Nebraska 529 plan, also known as NEST, received high praise from Kiplinger’s Personal Finance magazine. We invite you to read the full article at the following link:

To determine which college savings investment plans may be appropriate for you, please contact your PlanningWorks team!


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Life and Business Strategies...Start the Journey

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Fax (512) 684-8519 •

Investment Advisory services offered through, Waterloo Capital, L.P. a SEC Registered Investment Advisor. Securities offered through Calton & Associates, Inc. Member FINRA/SIPC OSJ 2701 N. Rocky Point Dr., Suite 1000, Tampa, FL 33607 (813) 605-0918 Waterloo Capital, L.P., PlanningWorks, Inc. and Calton & Associates, Inc. are separate entities.

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