Before Your Client Sells Their Business

So you have a client selling their business? Years of hard work, relentless dedication, and countless hours have led up to this moment. The anticipation is immense, and the reward should be everything they have hoped for.

They’ve checked off all of the necessary boxes and gone through the recommended to-do’s within the Merger and Acquisitions (M&A) space:

• Appropriate Exit Planning
• Alignment with the Right M&A Firm
• Marketing the Sale of Your Business to The Right Market
• Screening and Selecting Those Who Are Serious and Able To Acquire Your Company
• Negotiation of Terms
• Closing of the Transaction

Seems simple enough, right? Often, the excitement and due diligence involved within this process overlooks the strategic next moves upon closing. This matters when presented with the tax liabilities they are about to incur and the shade it can cast on the sunlight of their well-deserved payday.

The right time to consider strategic next moves and how to navigate transactional tax liability begins in the initial exit planning within the M&A process. This is a space where a lot of advisors miss out on an incredible opportunity to serve their clients. Unfortunately, the majority of folks walking down this path have never experienced strategic leadership pertaining to the dollars being transacted at the closing table and this makes a huge difference.

For most, items like reduced tax liabilities, additional investing power, decreased estate taxes, and strategic wealth building opportunities follow a pretty standard blueprint. But, for those in the know, there is a clear understanding that leverage is your client’s best friend when selling their business and coming into a large sum of dollars.  

Understanding the process of “leveraging” their tax liabilities is the first step to making the sale of their business go much farther.

Strategies and solutions exist that allow them to leverage resources that would normally go to the IRS and use them in a way that directly benefits their strategic wealth building initiatives. This type of leverage opens the door for long-standing, passive income streams that stand the test of time without exposing them to the risk of increases in future tax rates and market volatility.

Now, we are not saying that leverage is the only thing to rely on with the entirety of the money they have earned from the sale of their business. They absolutely should go and enjoy a chunk of what they have earned. Encourage them to take the long-awaited vacation around the world, spoil themselves and their loved ones, and give to charities that mean the most to them.

With the resources that would be going to the IRS and perhaps a bit more, they can make a small chunk turn into a large spread over the course of their lifetime and the lifetime of their heirs. This is how perpetual wealth building is done. Being strategic, wise, and staying ahead of the curve when it comes to liabilities, risks, and wealth building diversification.

The first step in this process is to have a conversation with a Financial Concierge who specializes in the M&A space and has vast relationships with CPA’s, Attorneys, and M&A firms.

A Financial Concierge who is vested in your client’s well-being and is confident and seasoned can make the transaction at the closing table have ripple effects that can last for many generations to come.