The time has come. All the years of hard work and sacrifice have finally taken you down the path to selling your business. Perhaps you’re handing the reins to a younger generation and looking at retirement, or you’re mid-career, selling off your ownership stake in order to get you to the next phase of your life. Whatever your situation, planning for your Second Act takes internal reflection, a realistic look at the numbers, and careful consideration of how you can achieve your goals. In this article, we’ll walk you through a common journey we take with our clients, considering that each business is unique in its circumstances.
The Big Question: How Do You Fund The Next Chapter?
Nobody wakes up one morning and says, “I think I’ll sell my business today.” It’s an intentional decision that comes from time spent analyzing and soul searching all the possible paths you could take. You have conversations and you explore your opportunities. Many of our clients want to be “work optional” after the sell – and they’re engaged in their communities, they’re philanthropic, and they’re working on their next big idea.
Before you decide to sell, ask yourself two questions:
- What do I want to do with this next step in my life?
- How will I fund these endeavors?
We recommend starting with the end in mind. Establish your goals and work with your advisor to compare the numbers. Is there a timeframe that you want to work from to achieve your goals? Can you afford to sell your business today or should you consider an alternate path in the short term? What do you need to maintain your current lifestyle?
One area to focus on to answer these questions would be to figure out the best option for selling your business. Are you selling to your children or family members? Are you handing the business off to successors within the business or are you selling to an outside buyer? Sometimes the right choice might not be obvious, and we recommend talking to professionals, your peers, and of course, those close to you who may be taking over the reins. Ask for references from outside buyers. Each step you take along the way can inform and influence you on the best approach to take, and mapping out the potential outcomes in each of these scenarios can help you determine what you’ll need to make the best decision.
During this process, you should explore multiple options, as owning and then selling a business is life changing and irreversible. It’s important to remind yourself that even though the act of selling a business is a transaction, businesses themselves are not about spreadsheets. They’re about people. Businesses take an immense amount of time to run, they cost money, and they can be emotionally demanding. Just remember that your decision involves you, your family, your employees, your customers and your vendors. You owe it to yourself to explore every avenue and ask every question before taking the next step.
Your Financial Advisor: An Unbiased Partner And Team Captain
One big question we get often when a business owner is considering selling is, “How can my advisor help me during this process?” Many of our advisors are also former or current business owners and entrepreneurs. We’ve been where you are and asked ourselves the same questions, staying up late into the night wondering how to best manage these life transitions.
Working with a financial advisor means aligning what you need with what you want, while minimizing regret and avoiding questions like, “Did I sell too soon? Did I make enough in this transaction?” Anytime an owner decides to sell, there are certainties that are anticipated and expected: a certain amount of money or more free time, perhaps. An advisor can tell you what you need to fulfill that next chapter in your life without rose-colored glasses. Sometimes business owners sacrifice personal goals for business goals, and an advisor can set up your finances in a way so that they are tied back to what you really want in life. They can also put you in touch with other key advisors – tax planners, attorneys, even business valuation professionals – and serve as your team captain.
The Safest Bet Is On Yourself.
Many owners have most of their money in their business and they’ve spent years building something from the ground up. You know what you’re capable of, and how hard you’ve worked to achieve and maintain success. You’ve led the charge and you’ve rolled up your sleeves. Because of that, we often say to our clients that the safest bet is on yourself. And having the right advisor on your side means leaning on a partner who is just as concerned about your family’s future as they are about making the numbers match up. Though this transition is temporary, the outcome will certainly affect your future. Believing in yourself and having the right people around you got you to where you are today. Selling a business is no different. All it takes is a little faith, a good plan, and having the right people in your corner.
The advisors at Private Ocean brings decades of business ownership and leadership experience and can help you create a strategy – or refine an existing one and execute it with acumen. Contact us today for a consultation.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Private Ocean, LLC [“Private Ocean”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Private Ocean. Please remember that if you are a Private Ocean client, it remains your responsibility to advise Private Ocean, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/ evaluating/ revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Private Ocean is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Private Ocean’s current written disclosure Brochure discussing our advisory services and fees is available for review upon requestor at www.privateocean.com. Please note: Private Ocean does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Private Ocean’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please also note: If you are a Private Ocean client, please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.