The Importance of Planning for Retirement from Business Ownership

Are you a business owner nearing retirement age? It’s a bittersweet season of life for most owners- excited to step away from the day-to-day stresses of running a business, but also sad at the idea of no longer leading the operation they worked so hard to build. No matter what emotions you are dealing with, it’s important to plan ahead for your transition away from the business. Create an exit strategy of sorts. The options for your exit are many, but let’s look at a few popular ones among business owners.

• If your business is family-owned? If so, look to other family members to take the reins. If a family member is interested, begin succession planning in regards to your exit and their entrance as soon as your discussions begin. Holbrook & Manter can assist with this process. We’ll help you examine estate planning vehicles such as grantor retained annuity trusts (GRATs) and family limited partnerships (FLPs), which can enable owners to gift business interests at substantial discounts from the net asset values of the entity’s underlying assets.
• Maybe you aren’t a family-owned operation or your family members aren’t keen on the idea of driving the ship when you disembark. Still look within your own walls to find an in-house buyer. These could be other co-owners, managers, etc. This is a popular succession option because these are the folks that know your business inside and out. Makes for an easier transition. Holbrook & Manter can help you and your current staff that is interested in taking the lead look at options such as management buyouts via employee stock options (ESOPs), buy-sell agreements, and more.
• Some owners are ready to hand the business off in its entirety to an outside individual. Once this fact is a known one, competitors, investors and perhaps even customers may come forward and express interest in buying the business. If this is the route you take, be on the lookout for a serious, strategic buyer. You’ll know you have one on the line when they are willing to pay above fair market value if the business interest contributes value-added benefits. Once you have a buyer selected, plan to help the new owner ease into their new role by offering to consult on and manage the transition.

There are other options to consider when it comes to stepping out of the role of business owner. The key is to identify them far before retirement day arrives. We can help you with that process and would be happy to work with you. Contact us today for more information.