Senior Director of Planning, Business Advisory Services

In this webcast, Senior Director of Planning for Business Advisory Services Joe Fahey, CFA® shares tips to consider when transitioning your business.

Transcript: Tips to Successfully Transition Your Business

Presenter: Joe Fahey, CFA, Senior Director of Planning, Business Advisory Services, Wells Fargo Private Bank

If you’re a business owner, when it comes time to transitioning your business, it can be a time fraught with emotion. You’ve put blood, sweat, and tears into growing your business, and it’s likely that you’re feeling a mix of emotions as you think about the next stage of your business and retirement.  And, these feelings are certainly understandable, since the decision to “keep or sell” your business is likely the largest and most complex financial decision you will make during your lifetime.

Hi, I’m Joe Fahey, Senior Director of Planning with Wells Fargo’s Business Advisory team, and I want to share some ideas to help position you and your business for an optimal transition.

Even if you’re not looking to transition your business now, it’s never too early to think about your exit plan. You might ask yourself where you see yourself and your business five years from now? Ten years from now? Do you see yourself selling the company? Or, do you have employees or family members who should carry on your legacy? By starting early and considering all your options, you can be well prepared for these types of discussions when the time comes.

Let’s say, for example, you get an unexpected offer from a potential buyer. Before you react, do the math. Work with your advisory team to develop a keep vs. sell analysis—and review your personal financial statement, cash flow, and liquidity on a before and after sale basis. This may give you the most valuable insights as to whether you should keep or sell your business, and help diffuse your emotions from clouding your decision making.

You should also ask yourself if you are even prepared to show your business to a potential buyer. In this regard, work with your advisory team and put on the “buyer’s hat” to objectively look at the attractiveness and readiness of your business from the buyers perspective. If you then decide to go to market, you will have the knowledge and confidence of what your business is worth, and the price and terms you need to complete a sale. Alternatively, if you decide to keep it for the family, you will have the peace of mind of knowing you have left the business in a strong position to give your heirs  the best chance for success.

I hope that you see that there is there’s an underlying theme to all these tips: It’s crucial to plan ahead! With such a significant event that impacts not only your business life but your personal life, why not prepare and think ahead? It will put you in control of the process and position you for the outcome you desire.

Our Business Advisory team can help you determine how and when you should transition your business and work with your entire team of advisors to position your personal wealth plan. This will allow you to maximize value for you, your family, employees and perhaps your favorite charities.

For more information on this topic, I encourage you to read our paper entitled: “Four Common Mistakes Business Owners Make with Exit Planning”.