Many entrepreneurs looking to sell their companies focus most, if not all, of their attention on getting the best price and maximizing the sale value. Most professionals who help business owners sell their companies do exactly the same. They all could be making a big mistake.

Selling a business is typically not simply about getting the best price. It's as much about profit and impact to the business owner and their family—and what to do next. To address these and other considerations, advanced-level comprehensive wealth planning is necessary.

At Parcion, we partner exclusively with business owners and their families to create a team of experienced professionals to guide them up to, through, and after their wealth event. We understand the challenges and vulnerabilities they face. We support them in unlocking the true potential of their wealth, showing them how to take care of the people they love for generations and think bigger about what's next. We create an advanced planning framework to help them keep more of what they've built for themselves, their families, and the causes they care about.

Let's take a closer look at the importance of planning in the process of selling a company.

THE NEED TO BE COMPREHENSIVE

Selling a business is usually one of the most significant—if not the most important—transactions in an entrepreneur's career. The owner has created value in their company and is now about to harvest a great deal of that value!

Comprehensive exit planning takes corporate exit planning—the sale of the business itself—and adds in strategies and solutions involving both personal wealth maximization and family wealth protection to get a broader range of results the owner desires.

The Comprehensive Exit Planning Framework:

Your Goals & Objectives → Elite Wealth Planning + Corporate Exit Planning → Sale of the Company → Elite Wealth Planning + Professional Investment Management

If you are a business owner, the starting point of the comprehensive exit planning process is identifying your goals and objectives. Your expectations—from what you want to happen to your business to what the next stage of your life is going to look like—are instrumental in determining how you approach comprehensive exit planning. This is where going through a discovery process with a financial professional can be extremely helpful.

Once your agenda is set—keeping in mind you will likely refine it over time—you can move on to elite wealth planning and corporate exit planning.

ELITE WEALTH PLANNING

Elite wealth planning is typically focused on the personal side of wealth. It is a comprehensive planning process that brings together state-of-the-art technical expertise, legal strategies, financial products, and the human element in a synergistic manner.

Definition: The human element is the personal and emotional component that includes everything and everyone that is important to you—as well as everything and everyone that could be affected by the wealth planning.

For many entrepreneurs, elite wealth planning seeks to achieve two goals:

1. Structure the ownership of a company to minimize taxes. There are different possible strategies that you can use, depending on your particular situation, to lower (and in some cases eliminate) the taxes you would otherwise have to pay on the sale of your company.
2. Protect assets (including your company) from unfounded and frivolous lawsuits. Many entrepreneurs do a substandard job of ensuring their personal wealth is protected from people who would try to take it unjustly. It is possible to legally insulate your wealth (depending on the situation).

CORPORATE EXIT PLANNING

Many business owners sell for less than they potentially can get. While they may be great at running their companies, they tend to know little to nothing about selling businesses for maximum value. As a result, they make mistakes and shortchange themselves.

Corporate exit planning is a strategic guide for selling your business. It addresses the sale process—taking into consideration your overall goals and the concerns you might have.

It makes sense to start this planning well in advance of a sale; depending on the nature of your company, it might take months or even years to make sure all the pieces are in place to generate maximum sale value.

Example: Many privately held businesses are dependent on the founders to continue making the company successful. Therefore, they need to be made redundant. That can mean putting highly capable people in place who can essentially replace the founders and who will stay with the company when it's sold—a process that could take years.

There are a number of steps to creating a strong corporate exit plan, including:

• Valuing your company. There are a number of ways to determine a company's worth. Valuation is part science and part art.
• Identifying drivers of business value. These are the aspects of your company that are attractive to potential buyers. They become important in marketing the company and negotiating with the prospective buyer.
• Leveraging value enhancement possibilities. You should take actions that enhance the company's valuation, from fixing management problems to locking in customers to eliminating any personal expenses that are being run through the company.
• Analyzing the exit options. There may be many types of potential buyers. Examples include family, senior management, competitors, and private equity firms. The possibilities and implications of each exit option should be evaluated.
• Strategically deciding when to sell. Macroeconomic factors and business cycle factors play roles in deciding the optimal time to sell, as do personal matters. Being ready when circumstances align is valuable.
• Effectively marketing the company. Marketing can play a major role in selling a company. The ability to identify a larger number of interested buyers, for example, can create a competitive environment that can prove very beneficial to you. Rather than accepting the first unsolicited offer to purchase your business, it's prudent to engage with a mergers & acquisitions advisor or investment bank so that they may deeply understand you and your business, and run a sales process to maximize your outcome.

REVISITING YOUR PLAN POST-SALE

After the sale of your business, your personal world will change—usually quite significantly. It's then that elite wealth planning comes roaring back into the picture. For example, you may very well need to upgrade your estate plan. You might also benefit from restructuring your asset protection plan.

Of course, there's also that large pool of liquid assets that the sale probably created—assets that you need to decide how to manage. If you lack the expertise, it is critical to identify high-caliber professionals who can invest your wealth in alignment with your goals and objectives.

We see other issues that also become important post-sale. For example, families often embrace philanthropy in a bigger way after selling their companies—as they suddenly find they have the time and money to donate to the causes that are deeply meaningful to them. This can open up the need for charitable planning and the formation of private foundations, donor-advised funds, and other philanthropic vehicles.

TAKE ACTION

Ultimately, a comprehensive exit plan will accomplish four things:

• Provide focus on what is important to you—your goals and objectives.
• Ensure you can get the best price for your company based on the parameters you set.
• Make sure you walk away from the sale of your business with the most after-tax money possible, taking into account your overarching agenda.
• Position you to best manage the proceeds and protect your wealth after the sale.

Preparing for a business sale is an important and often overlooked step in the process. Surrounding yourself with industry experts will help position you and your family for success. As a family office, we are committed to providing entrepreneurs and their families with the confidence, clarity, and resources to achieve their goals. Our approach to thoughtful decision-making and access to best-in-class partners offers a roadmap for navigating the intricacies of exiting a family business.