Ep. 59 — Cash Flow Magic: How to Sell Your Business Without Selling to Strangers

Welcome to the "Show Me The Way" podcast with David Seitter

In this episode of "Show Me the Way," Dave and guest Terry Staley, an experienced Tax Professional, Certified Exit Planner, and business advisor from MarksNelson, delve into the intricacies of business succession planning and insider transactions. He details the process of crafting financial plans for business owners to transfer ownership internally, often to employees or family members, using cash flow models.

Ep. 59 — Cash Flow Magic: How to Sell Your Business Without Selling to Strangers

According to Terry, discussing business succession is critical. While owners may only spend a brief time on taxes, their interest perks when it comes to transitioning out of their businesses. Three primary objectives kick off these discussions: understanding the timeline, identifying who the business will transition to, and determining the post-sale financial needs of the owner.

Insider vs. Third-Party Sales

The conversation highlighted two main avenues for business sales: insider and third-party. While third-party sales are often attractive for their high multiples, they can come with strings attached, such as loss of company culture and management freedom. Insider sales, on the other hand, allow owners to maintain legacy and control, providing financial transactions through company cash flow and benefiting both parties.

Crafting the Perfect Transition Plan

Terry emphasizes the importance of a comprehensive plan, which begins with a deep fact-finding session. By understanding the dynamics of the business and its stakeholders, Terry’s team models cash flow projections that highlight the most sustainable and beneficial transaction structure. These plans determine the feasibility of transitions and whether value alignments are achieved over a typical period of five to seven years.

Unique Advisory Services

Beyond his CPA skills, Terry possesses a knack for advisory services, tackling not just the numbers but the emotional and management aspects of succession planning. By assembling a team of key advisors—from financial planners to corporate attorneys—Terry ensures a complete and tailored approach for each client.

Navigating Family Dynamics in Business Sales

Terry shares insights on the sensitive nature of family-involved transactions, underscoring the importance of clarity and fairness in estate equity. In his experience, gifting stock to non-business active siblings can sow future discord, and he advocates for financial compensation outside of stock ownership for such family members.

Preparing for the Unexpected

Contingency planning is vital, ensuring the business continues seamlessly in events like the sudden departure of a sole owner. A robust succession plan includes buy-sell agreements and ownership transfers to ensure business continuity.

Terry Staley's approach to business succession and insider transactions highlights the need for careful planning and experienced guidance. His message is clear: starting early and developing a thorough plan with the right advisors can mean the difference between a chaotic or a seamless transition.

For business owners interested in securing their legacy through successful succession planning, Terry Staley can be contacted via email at tstaley@mnadvisors.com or on his cell at 816-729-4192.

Whether you're contemplating an insider sale or navigating the complex landscape of business exits, Terry and his team offer a holistic, customized approach to ensure a smooth and successful transition for business owners and their successors.

 

 

To reach out to Dave for advice or consultation, please visit www.davidseitter.com or email him at dseitter@spencerfane.com

 

Disclosure

This podcast is provided for educational purposes. It does not constitute legal advice and is not intended to establish an attorney-client relationship. The recommendations contained in this podcast are not necessarily appropriate for every individual or business. In determining the best course of action, business owners should consult with an attorney on their distinct circumstances.