Don’t Leave Money on the Table When Exiting Your Business

​​​You’ve invested many years in growing a successful real estate or construction company. So how do you ensure that it continues to grow and prosper in the years to come?​​

Simple – an exit plan.​​

Hopefully, one day your business will be transferred to new ownership – whether a family member, an employee or an outside party. Securing the future wellbeing of your company as well as your personal financial wellbeing requires planning for this transition well in advance of when you’re actually planning to exit the business. ​​

​​Don’t leave valuable wealth on the table when you transition out of your real estate or construction business. Begin exit planning now. Embarking on this process will enhance the value of your company by singling out areas for improvement ahead of a possible sale and enabling you to reduce the taxes you’re obliged to pay today and in the future. Here are some suggestions to get started.

4 Key Considerations​

1. Start by determining what’s important to you. What do you want your future to look like? If you are headed toward retirement, consider what kind of lifestyle you want and how you are going to afford it. ​​

You’ll want to keep or increase the value of the business while retaining key employees and determining who will be the best successor. And if legacy is important to you, protecting the value of your business – for family, clients or community – is a consideration.

2. Assess your business like a potential buyer. Conduct a critical assessment of operations as if you were a purchaser and identify the drivers and impediments of value. These might include:​​

• Diversified customer base
• Skilled workforce
• Strong management team
• Distinctive products / services
• Recurring cash flow
• Strong operational performance
• Low risk

3. ​​Discuss options and strategies with objective advisors. Sit down with your business and personal financial advisors and have a candid discussion about your goals and options for achieving them, such as selling to family members or an outside party or orchestrating a management buyout.

Their perspectives and experience can help to harmonize your business and personal goals with appropriate exit strategies. As well, advisors can provide suggestions for structuring your company to optimize the returns of a sale. ​​

4. An exit plan addresses tax-saving opportunities on numerous levels: corporate, transaction, personal and estate. Tax reorganization – leveraging the lifetime capital gains exemption, estate freezes, family trusts and other strategies and structures – is often an integral part of exit planning to eliminate, minimize or defer income and estate taxes. ​​

Take the Time

The most effective strategies take time to execute. By initiating planning years before exiting, you can ensure that you don’t leave valuable wealth on the table when you transition out of your real estate or construction business – and that you realize your goals for its future and your own. ​​

Contact Jim Rea, Business Advisor, Succession Services, at 403.537.7641 or [email protected]​​​.