Seven Key Steps to Getting it Right
Like so many trailer dealership owners, the Smiths had felt the pain
of the 2007 economic recession. As their business recovered, the
couple began to consider selling before the next major downturn.
Although they had spoken with their accountant about their idea,
they still lacked clarity and confidence on a wide range of exit
planning issues.
The process involved a number of key steps:
1. Discovery. The first step should always be a discovery call or
meeting that helps the business owner(s) and their professionals
become crystal clear about not only their financial picture, but also
their key values, goals and preferences regarding their company,
employees, family, future needs, any charitable intentions and so
on. This discovery process is important because the information
obtained from it helps determine which financial strategies will be
used going forward.
The Smiths’ key findings included:
• The business generates $12 million in sales, with annual
net profits of $500,000.
• The couple holds $750,000 in financial assets outside of
the company.
• They own the building in which the dealership operates.
• They have two children, ages 25 and 28.
• They want to travel during retirement, spend time with
family and support their church.
• They value being financially independent and want to
ensure they are never a burden to their children with
money concerns.
• They seek to maintain their current lifestyle post-sale by
living off of approximately $150,000 a year.
When it comes time to sell your trailer dealership, you’ve got one
opportunity to get it right. There are no do-overs. That means it’s
vital to successfully navigate the entire process—from the steps
to take well before you bring your dealership to market, to the
sale itself and the crucial post-sale planning that can help ensure a
secure financial future for you and your loved ones.
Unfortunately, it’s all too easy to overlook important moves—and,
as a result, end up settling for a lower valuation than your business
deserves, walking away with less after-tax wealth in your wallet or
incurring too much financial risk.
To see how a well-crafted exit planning strategy can empower
you to maximize the benefits you generate from the sale of your
dealership, consider the example of a husband and wife—let’s call
them the Smiths—who came to see me a few years ago to go
through our Second Opinion Process as they were thinking of
transitioning to the next stage of their lives.
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2. Team assessment. In reviewing the professionals the Smiths
currently worked with, it was decided that their accountant did not
have the adequate experience or resources to effectively guide the
company through the sales process with maximum effectiveness. A
new accounting firm with significant experience in helping owners
sell their businesses was selected.
Additionally, there was a discussion about whether an investment
banker could (given the Smiths’ situation) add value above and
beyond his fee. It was determined that an investment banker
would indeed help the couple market their business, find qualified
buyers and create an auction-like environment that would generate
competition for the dealership (and boost potential buyers’ offers).
Finally, we came aboard as the Smiths’ wealth manager to oversee
and quarterback all experts involved in this process—coordinating
their various efforts around the needs and goals the Smiths
specified during the discovery meeting.
3. Valuation estimate and adjustment. Naturally, sellers
want the highest valuation for their businesses as possible. An
expert valuation process will determine an appropriate value,
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