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Business Owner Contemplating Retirement


An individual has owned a small manufacturing business for more than 20 years. He is in his early sixties and is planning to retire in the next few years. The business is a major part of his total investment portfolio. He needed help to develop a succession plan.


Since the business is a major part of this individual’s retirement plan, he needed to explore the best way to capture the equity in his company. Three options could be explored with him: (1) direct sale to a third party; (2) structured sale to top employees with payments over several years; and (3) a sale to all employees through an Employee Stock Ownership Plan (ESOP). We would discuss the advantages and disadvantages of each approach with him and prepare a thorough analysis of the impact taxes would have on each approach. Equally important to the business owner is the on-going legacy of the business. He has put his “blood and sweat” into the business and is emotionally attached to the people and what the business stands for. Some of the employees have been loyal to the owner for many years. We can assist the owner in balancing his three key objectives – maximizing his financial interests, leaving a legacy and rewarding long-term loyal employees. Our assistance can allow him to make an informed decision about how to capture the equity in his company while taking into account his non-financial objectives.