As a business owner, you face a unique set of issues. In most cases, the majority of your net worth and your entire income stream may be tied to your company. After working so hard to build your business and as you approach retirement age, you may ask the question – now that I am ready to retire, what am I going to do with the company?

I’m Ready to Retire – What Should I Do with My Company?

Business Transition

It’s important to identify the financial and personal implications of changing the ownership of your business. As part of the process, examine your contingency planning. While a portion of the contingency plan may involve insurance that you already own, planning for the business should be much more involved than providing funds for the family and the business in the event of the untimely death or disability of the owner. Consider creating a plan for how the business will survive and continue, how your family will be taken care of, and who are the best people to move the business forward when you are no longer in charge.

Planning for Business After You Retire

Next, formulate a transition plan for the eventual change in ownership to help you re-define your relationship with your business. In doing so, look at both the short and long term of how you and your company will evolve through the change in control.

This transition may generally involve one or more of four choices:

  • Sell or give your business to a family member.
  • Sell your business to your management team or key employees.
  • Retain ownership in your business and allow your management team to run the day-to-day operations.
  • Sell to a third party.

Formulate a Business Transition Plan

Every business owner must eventually confront a business transition, as the ownership in your business will change at some point, either voluntarily or involuntarily. Transition planning for this instance is just as critical as understanding the implications of the transfer. If the transition is not managed properly, your business interest and the value that you want to preserve for yourself and/or transfer to your family could be at stake. The goal is to provide you with the right information so that you can make the best decision for the best interest of all involved parties.

Proper Planning of a Business Transition

As you delve into a business transition, there are multiple components of proper business transition planning to consider. Though detailed, being prepared in the following areas will help to ensure for a smooth business transition.

  • Long-term business goals
  • Business succession issues
  • Family dynamics and ownership issues
  • Diversifying your asset base
  • Estate planning
  • Risk management
  • Establishing family limited partnerships
  • Establishing entities
  • Tax strategies

Disclosures

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice.

There are risks involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks as well. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than investment-grade securities, due to the speculative nature of their investments.  Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. 

Diversification may not protect against market risk. There is no assurance the objectives discussed will be met. Past performance does not guarantee future results. Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index.This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice.