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Business Exit Planning

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October 2017 Newsletter

We are captivated by events in which small, ordinary actions produce extraordinary results. In the financial world, this delight and wonder is often directed toward compounding, the way invested money can seemingly multiply itself. But sometimes we are so intrigued by the extraordinary aspects of compounding that we overlook the ordinary actions th...
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September 2017 Newsletter

Just because you have a plan doesn't mean it will work. An integral feature in many personal financial programs is a projection of future accumulations, and the retirement income this accumulation could provide. This projection is derived from a combination of the number of years (to accumulate and decumulate), the amount of money (either deposited...
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August 2017 Newsletter

You are not so smart-but you can get lucky! I f you want to be successful, you should emulate successful people. Seems logical, right? But David McRaney, author of the 2011 book, "You Are Not So Smart," says the successful – great athletes, wealthy business owners, popular entertainers, powerful politicians – may not know the secrets to their succe...
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July 2017 Newsletter

                        Professional Assistance = Time Management How much of our time is spent merely existing instead of living? This was the question posed by Arnold Bennett in his 1910 book "On Living." Bennett, a novelist and maga...
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June 2017 Newsletter

                                   The Same Retirement in Feet & Meters ! B oth the English and Metric systems provide accurate measurements of distances, weights and volu...
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May 2017 Newsletter

Financial Ideas That Have "Jumped The Shark"!    I n September 1977, the hit TV show "Happy Days" started its fifth season. Since its debut, the situation comedy about 1950s-era high schoolers had seen a once-minor character, Arthur Fonzarelli – "the Fonz" – become a pop-culture icon for his leather jacket and cool demeanor. The season-op...
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April 2017 Newsletter

                       Can You Be Trusted with Your Money? An underlying assumption in much commentary about personal finance is that most people are terrible with money. Financially illiterate, manipulated by marketing, distracted by present co...
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March 2017 Newsletter

Knowing the Reasons NOT to! When it comes to assessing your relationship with the professionals that provide input and products for your financial transactions, one of the things you might want to evaluate is how well these people can explain the reasons not to do something, especially the things that they most often recommend or support. Some exam...
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February 2017 Newsletter

Capital Management: Your Economic Edge over Automation! Whatever you're doing right now to earn a living, there's a good chance much of your work could eventually be done by a machine. In fact, some futurists predict machines will do all our work. On first exposure, this may seem ridiculous. But both history and current developments make a reasonab...
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January 2017 Newsletter

Maybe It's Time To Say UNCLE! Many American households are vexed by their financial condition. They feel like they don't have enough money, carry more debt than they should, are underfunded for retirement or their kids' college education, and aren't confident about their futures. The financial experts – i.e., economists, researchers, and policymake...
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Headwinds

Bicycle riders appreciate the importance of avoiding headwinds on a long ride, especially as they approach the end. A headwind causes a rider to either expend more effort or take more time to arrive at a destination. When a rider is already tired, neither option is appealing.

A bike race and owning a business are remarkably similar when it comes to headwinds. As we anticipate the end of our business ownership journeys, the headwinds we face today require us to devote more effort or time to exit our business in style.

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Exit Paths for Business Owners

When business owners start to think about exiting their companies, the number of possible Exit Paths can seem limitless. In reality, there are only eight:

1. Transfer the company to family member(s).
2. Sell the business to one or more key employees.
3. Sell to employees using an employee stock ownership plan (ESOP).
4. Sell to one or more co-owners.
5. Sell to an outside third party.
6. Engage in an initial public offering (IPO)
7. Retain ownership but become a passive owner.
8. Liquidate

Which of these Exit Paths do owners intend to use?

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Business Valuation: 5 Reasons Why It's Important

Few business owners relish spending money on something unnecessary. For most owners, hiring an expert to estimate the value of their companies falls into the unnecessary category. Thus, it is no surprise that owners typically respond to an Exit Planning Advisor's recommendation to get an estimate of value for the company with some variation of, "Now? But I'm not planning to leave for years," or "I built this company, so I know what it is worth better than any so-called expert."

Before you join these owners and scratch business valuation off of your Exit Planning to-do list, consider the following five reasons why you should put an estimate of value at the top of your list.

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Business Continuity Planning

Successful owners are usually optimistic people, somewhat averse to dwelling on the more unpleasant aspects of Business. Contemplating one's demise certainly qualifies as an unpleasant aspect. Consequently, advisors tend to use a lot of softer phrasings when they talk about business continuity. They ask, "What happens if the owner 'passes on' or 'leaves the scene?"' They talk about the consequences of an owner's death on the business in theoretical, third-party terms: "Should an owner die,..." Unfortunately, these oblique references gloss over the central fact that you, the owner, must take care of business now in case you (rather than someone anonymous third party) die tomorrow.

This white paper discusses business-continuity planning in a way that you may not expect. Typically, when owners think of business continuity, they do so after being prompted by an insurance or legal advisor who warns that unless they take prudent measures, they will leave their families unprotected in the event of death or permanent disability.

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Employee Incentive Planning

As business owners plan to exit their businesses, they must confront the challenge of incentivizing employees - specifically, management - to stay with the company after they have left. Having a strong established, and committed management team to take the reins once an owner has exited is becoming more of a prerequisite that a luxury when selling or transferring the business to a third party. There are several reasons why a strong management team is essential to a successful business exit for owners.

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Using Short-Term Key-Employee Incentives to Increase Sale Price

One of a business owner's greatest challenges is to attract, motivate, and keep key employees. As owners approach the end of the marathon of exiting their business, often tired and distracted by everything they've done, they begin to assume that it is no longer worthwhile to keep and motivate key employees. However, keeping key employees is not only worthwhile but also necessary if the business is to be sold at the highest possible price.

A basic premise of key-employee incentive planning is to keep the key employee as a long-term, contributing member of the company. Consequently, incentive plans incorporate relatively long vesting schedules and provide benefits that are relatively moderate in the early years but become substantial as the years pass (usually after the employee has participated in a plan for at least five years).

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Transferring Wealth to Children: A Primer for Business Owners

Both business owners and non-business-owning parents want to transfer a monetary legacy to their children, if possible. However, business owners are different in the tools they can use to transfer wealth.


Whether you own a business or not, the fundamental questions are the same:
1. How much wealth do you want to keep?
2. How much wealth do you want the kids to have, and how much is too much?
3. Which tools minimize the estate-and-gift-tax consequences of transferring wealth?

Business owners have to put those questions in the context of their Exit Objective" "How much money do I wish to have after I exit my business?"

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Transferring Your Company to Key Employees

Owners wishing to sell their business to management - specifically, key employees - face two unpleasant facts: Their employees have no money (most likely) and they cannot borrow any, at least not in sufficient quantities to cash out the owner. Thus, each transfer method described in this white paper uses either long-term installment buyout of the owner or someone else's money to complete the buyout. The last method discussed - the modified buyout - uses both an installment buyout and someone else's money.
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Is Your Business Equipped With An Exit?

Office space. Check. Desks. Check. Chairs. Check. Whether your tools are computer and copy machines or a pickup truck and a power saw, one of the most overlooked essentials is a way out. As a business owner the last thing you want to discover is that you don’t have a way out when you need one. A much better option is to start planning for that exit now. Sure, you can always walk out the door right now if you wanted to, but only if you’re willing settle for a less than ideal payday. The kind of exit we’re talking about keeps you in control of every last detail and lets you leave in style.

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How To Sell Your Business To Your Employees.

Selling your businesses to your best, most loyal and / or most ambitious employees can make a lot of sense: they have something to work toward, the business can continue to thrive, and you can exit with your financial security in tact. How?

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