Plain and Simple: Bright Business Insights Spring 2018 | Page 9

Option 2: Selling Your Business • Sell to a private equity group – If you have a large, profitable business with a strong management team in place, If a significant portion of your net worth is in your business, you’re your company might be attractive to a private equity group. like most owners who plan to sell in order to help fund their retirement. Private equity groups will often pay an above-average There are many options to consider when choosing this route. multiple of earnings if the company performance is strong • Selling to your kids – Rather than gifting, you might choose to sell your business to your kids. When taking this route, don’t be afraid to get creative when structuring the sale to your • and has the potential for continued growth. Option 3: Close The Doors And Liquidate kids, which will help provide you with the cash flow you need Sometimes, a business owner might find themselves in a p osition without creating too much of a financial burden on the business. where they can make more money by closing the doors and selling Sell to a strategic buyer – If your goal is to maximize your selling price, your business may be worth more to someone already in your industry, such as a competitor, supplier or customer. A business that’s active in your industry may already have the infrastructure and distribution channels in place and can often add your revenue stream to its business while eliminating duplicated expenses. off assets rather than selling an operational business. This situation arises when the business is not very profitable or when it will have little or no value without you at the helm. If you decide this is your best option, you may look to sell your equipment and inventory to a competitor or at an auction. Be sure to have a thorough knowledge of current market value for the equipment and inventory you plan to sell. When considering your cash flow, keep in mind that after closing your business, you will continue to collect your receivables and still need to pay off any outstanding payables. Next steps When it comes to identifying the succession plan that’s right for you, remember that your journey will be influenced by your overall financial well-being, your personal goals, your concern for your customers and employees and your desire to leave behind a positive legacy. The best place to start on your succession planning journey is to conduct a business valuation, which will provide you with a better understanding of what your company is worth. The business valuation services team at Rea has conducted countless valuations and has helped business owners across the state and country with their succession planning strategies. Give me a call to learn more. by: Mark Fearon, CPA, CGMA Principal 122 Fourth St. NW, PO Box 1020 New Philadelphia, OH 44663 [phone] [email protected]