To effectively position your business for sale, focus on demonstrating the synergistic fit with potential buyers, highlighting more than just cost-saving opportunities. Conduct a thorough analysis of your company’s financials and potential synergies, ideally with the help of a third-party accounting firm, to showcase the incremental value your business can offer. Understand the strategic goals of potential buyers, and align your business’s strengths with their needs, emphasizing revenue synergies such as market expansion and technological enhancements. Assemble a strong advisory team to negotiate a deal that compensates you for these synergies, and consider structures to bridge valuation gaps, ensuring you capture a fair share of the synergistic value post-transaction.

Tax policy changes, particularly those related to the 2017 Tax Cuts and Jobs Act (TCJA), could significantly impact your business. With key provisions of the TCJA set to expire at the end of 2025, business owners may face changes in areas such as gift and estate tax exclusions, bonus depreciation and the Qualified Business Income deduction. These changes could affect your tax liabilities and financial planning strategies. Additionally, the potential for new tax legislation, driven by the current political landscape, could introduce further complexities, such as adjustments to the SALT deduction cap and other fiscal measures. Staying informed about these developments and consulting with your tax advisor is crucial to understanding how these potential changes might influence your business operations and financial decisions.

When considering passing your family business to the next generation, it’s crucial to plan thoroughly and address several key challenges. Start by preparing a succession plan that includes identifying and training future leaders, ensuring proper estate planning to manage tax liabilities, and establishing a governance structure to support new leadership. It’s also important to balance the business’s capital needs with the risks of concentrated wealth and to foster family harmony by aligning on a long-term vision. Additionally, consider the psychological factors and perspectives of all key players, including family members and key employees, and document your plans with professional advice to ensure a smooth transition. Regularly reassess these plans and maintain open communication with family members to adapt to evolving circumstances and intentions.

During a transaction involving a private business, a deal team is composed of several key specialists who ensure a smooth process and alignment with long-term goals. The team typically includes an accountant, who verifies the company’s financial health, and a business broker or M&A advisor, who assists in going to market, finding potential suitors and properly valuing the business. A valuation expert may be involved to provide a formal appraisal if needed. A corporate attorney plays a crucial role in preparing for and negotiating the sale or transfer of business interests, while a trusts and estates attorney offers advice on estate planning and wealth transfer strategies. Additionally, a personal banker and investment manager aid in financial planning before, during and after the transaction. An accounting and tax advisor is essential for making the deal more tax-efficient and conducting a “quality of earnings” analysis. Lastly, a wealth management team ensures that the sale of the business aligns with the owner’s financial and personal goals. Together, these professionals provide comprehensive support throughout the transaction process.

When considering the transition of your business, you have several options. Broadly, businesses can be sold to third parties, such as strategic buyers or private equity groups, or to insiders such as family members or employees. Sales to insiders often involve leveraged recapitalization or an employee stock option plan (ESOP), which may require substantial seller financing over a multi-year period. On the other hand, selling to third-party buyers typically requires more time and due diligence, with proceeds expected within a year.