Creative Solutions for a
Shared Vision
Many closely-held businesses and professional service firms with several shareholders and/or partners will engage in an internal buy out with the other more junior shareholders/partners. They will have a Buy Sell Agreement but often times is underfunded or not even funded.
Funding should be considered for Death, Disability and of course Retirement. Very basic forms of insurance can be procured for death and disability but when it comes to the retirement buy out is where it becomes more challenging.
For many smaller to mid-size businesses and professional service firms access to capital to finance business ownership transition poses challenges. Erosion due to taxes makes ownership transition planning inefficient, leaving inadequate proceeds to fund the retiring shareholder/partner’s retirement needs. Often times the business becomes the “bank” limiting it’s working capital/growth for remaining shareholders/partners.
As a Member of PH Robb Legacy Alliance, we offer a unique cost and tax-efficient solution we call Equity Access that not only saves the business hundreds of thousands of dollars but secures funding for that retiring shareholder/partner.
RESULTS
● Provides relatively easy access to capital to fund business ownership transition without limiting the new owners ability to finance ongoing working capital needs.
● Secures assets for retirement and estate planning for the retiring shareholder/partner by providing 3-4X greater benefits over the lifetime of the retired shareholder without being reliant on the future success of the business.
● Addresses the economic inefficiencies in transitioning business ownership by converting capital gains/ordinary income to “tax-free” income.
● Spreads out the cost to the Company to twenty years vs the typical 10 years for Installment Sales thereby reducing financial burden.
● Ultimate cost to Company on a net present value basis is reduced by 40-60% based on ages of retiring Shareholders.
78% of Small Business Owners end up selling their business often for far less than its market value to fund their retirement because they did not plan.
You’ve Put A Lot Into Your Business. What will you get out of it?