You will need to meet with a few different professionals to coordinate activities. Your teamshould include your Financial Planner, CPA, Business Valuation Specialist, and BusinessAttorney. These people will work together to ensure the best outcome for you.
The most important records are your accounting reports, tax returns, and bank records.
The most common scenario involves selling the business to an immediate family member who isinterested in owning the business and actually has the skills required to manage it successfully.Otherwise, a friendly third-party buyer should be sought. Possible candidates might include aknown competitor. If a good candidate can’t be found then a reputable business broker shouldbe included in your team of trusted professionals.
The attorney will help look after the current owner’s best interest and also formalize the termsagreed upon by the potential buyer.
At the time of purchase the buyer will either pay the full agreed-upon price for the business orwill make a significant down payment and pay the balance like a loan. The life insurance policyon the buyer ensures that the seller will receive the full value for business in the event of thebuyer’s death. The life insurance policy on the seller provides the buyer with a tax-free lump sum that can be used to pay the surviving family for the ownership of the business. Since premiums are much smaller than the coverage provided, the buyer’s total cash outlay can be significantly reduced.
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