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5 Tips to Get Started With the Business Transition Process

James Zahansky, AWMA®
Principal/Managing Partner, Investment Advisor & Chief Goals Strategist

For business owners who are nearing retirement, a successful business transition plan can play an important part in creating and preserving the value of the business after it has changed hands – not to mention the ability to Live Well the way you’ve always envisioned in retirement.

Here are some tips to keep in mind to help you maximize the return on your business investment as you prepare for retirement, whether it’s one year, five years, or ten or more years away.

1: Evaluate Your Market Potential

Take a long, honest look at your business and the broader economic climate when estimating your chances of a successful transition. Consumer confidence in your community, region, or industry may influence the future value of your business. It may also be helpful to note the growth of your enterprise versus the industry overall. Additionally, doing this early and long before you hope to transition your business may help reveal the potential for future growth.

2: Prepare Your Business

Next, look for anything that may delay or negatively impact the transfer of your business. This may include an evaluation of your personal and business tax returns by a financial professional as well as a review of any potential local or state tax issues. If you have a business presence in multiple states, this may also help avoid potential tax issues.

Now is also an ideal time to contact a tax professional if you're thinking about restructuring your business for tax purposes. They may be able to help you navigate the potential drawbacks and highlight any benefits that may result from a restructuring.

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3: Do Your Due Diligence

If your business’s financial documents aren’t up to date, now is the time to remedy that. Standard documents to check may include incorporation documents, equity ownership records, meeting minutes and tax classification records

If you do have equity holders, do you know whether they are entitled to a right of refusal? Additionally, if your business owns any intellectual property, are you certain it has been properly registered? The answers to these questions may have considerable implications for your transition plan.

This is also the time to start thinking about your existing business relationships. Existing long-term contracts or distribution agreements may need to be evaluated as well.

4: Include Your Employees

At some point in your plan, it may be helpful to share your transition strategy with those you employ. Have answers ready for some tough questions and be prepared to be as transparent as possible. Securing employee buy-in can be a powerful element in your strategy that can lead to essential conversations with those you trust most.

Remember, your business isn’t the only thing that is going to change through your transition. The livelihood of your employees and their families will be impacted as well, meaning it’s important to allow them to voice their concerns. Creating a safe space for open conversations may help alleviate their worry.

5: Ask For Help

If you’re like most successful entrepreneurs, you already have a dedicated team of professionals to help your business. In addition to the CPAs, insurance agents, or wealth managers you may already utilize, a business attorney and an attorney who specializes in estate planning may be valuable additions to your team. Choosing one key individual to lead the group may also be a smart move. Consider designating a single point of contact who can help with the coordination efforts and clear up confusion during the transition period.

Remember, it’s okay if you’re unsure which steps to incorporate into your transition plan first. Just like your business, managing your transition is a team effort, and being proactive in actively seeking the advice of a qualified financial professional may increase your chances of success.

For assistance in this process, contact us at Weiss, Hale & Zahansky Strategic Wealth Advisors. We partner with business owners to help achieve their goals, including a smooth and successful business transition.


Presented by Principal/Managing Partner James Zahansky, AWMA®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259, 860.928.2341. http://www.whzwealth.com These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.

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