Successfully Transferring a Small BusinessShare this post
There are four primary goals of a successful transfer:
- Generating sufficient financial reserves for the owner’s retirement after active involvement in the business ends.
- Transferring the business intact (and for its maximum value if sold to a third party) to the owner’s chosen beneficiaries
- Minimizing the cost of transfer
- Providing sufficient liquidity to pay the transfer costs.
Business owners are typically unsure of their worth. Without a solid idea of the business value, the owner is guessing at whether or not they will have sufficient financial reserves once the business is sold to retire in their lifestyle of choice.
With a privately held business, the transfer of shares is complicated by many things; the ability of the desired successor to actually save the money to purchase or finance the purchase of the shares, as well as issues such as minimization of tax liability, fairness and many others.
In addition, the departure of one owner usually has a great effect on the business value and income. It is typically a challenge to find, keep and train the right successor. Since privately owned businesses are usually dependent on the departing owner, the survival of the business may be at risk and of decreased value if the transition is less than successful. If you have any more questions about successfully transferring a small business, don’t hesitate to contact the lawyers at Anthony J. Madonia & Associates. They’re always happy to help.