Business Owner Exit Planning
The Situation
A 58-year-old business owner who had built a successful manufacturing company over 25 years approached Ivory Oak Capital to plan his exit strategy. The business represented over 80% of his net worth, valued at approximately $8 million. He wanted to retire within 5 years but faced complex decisions about exit timing, sale structure, tax implications, and post-sale wealth management. He had received preliminary offers from potential buyers but lacked clarity on how different sale structures would impact his after-tax proceeds and retirement security. Additionally, he needed to coordinate his exit with estate planning goals and ensure his spouse would be financially secure regardless of his longevity.
Our Approach
Dylan T. Franzten assembled a coordinated team including the client's CPA, estate attorney, and business broker to create a comprehensive exit strategy. The planning process included detailed modeling of various sale structures (asset sale vs. stock sale, installment sale vs. lump sum) and their tax implications, analysis of qualified small business stock (QSBS) exclusion opportunities, development of a diversification strategy for post-sale proceeds to reduce concentration risk, coordination with estate planning to maximize wealth transfer efficiency, and creation of a post-retirement income strategy that would support the client's lifestyle while preserving capital. The plan provided clear financial projections showing after-tax proceeds under different scenarios and how those proceeds would support retirement goals.
The Outcome
The business owner successfully negotiated a sale structure that optimized his tax position, utilizing QSBS exclusion to shelter a portion of the gain and structuring the transaction to spread tax liability across multiple years. The coordinated planning approach identified tax savings opportunities that increased his after-tax proceeds by an estimated $800,000 compared to the initial offer structure. Post-sale, Dylan implemented a diversified investment strategy that reduced concentration risk while generating income to support the client's retirement lifestyle. The estate planning coordination ensured efficient wealth transfer to heirs while maintaining flexibility for the client's needs. The business owner now enjoys retirement with confidence that his financial security is established and his legacy goals are addressed.
What This Means for You
If you're a business owner planning your exit and your business represents a significant portion of your net worth, comprehensive planning that coordinates tax strategy, investment management, and estate planning is essential. Every business exit is unique, but the process of analyzing sale structures, modeling tax implications, and creating a post-sale wealth management strategy can help you maximize after-tax proceeds and transition successfully to retirement. This case demonstrates how coordinated planning with a team of advisors can identify opportunities and avoid costly mistakes during this critical financial transition.
Ready to Plan Your Business Exit?
If you're a business owner planning your exit and want to maximize after-tax proceeds while ensuring retirement security, let's discuss your specific situation.