Who’s On Your Team?

Who’s On Your Team?


Even if you’re not planning to sell your business anytime soon, it’s still a good idea to begin lining up a team of professionals to address key issues that may arise. This post offers a quick rundown of the “likely suspects.”

Business Broker
A business broker helps find buyers for your company. Using personal connections as well as business sale websites, they can help create a buzz around your business and find you a potential new owner. The good ones also help prepare your business well in advance of listing by making sure that you are on the right track to maximize the value and marketability of your company.

Succession Planning Consultant
If you plan to keep your business in the family or transfer it to existing employees, there are a number of transition issues to consider. Succession planning consultants can advise you about the pluses and minuses in each scenario, and help you evaluate whether you can successfully achieve those goals. Typically these consultants work closely with your estate planning attorney, tax advisors, financial planners, and CPAs.

Business Attorney
Your business attorney will advise you about your rights and responsibilities in any proposed transaction, help negotiate key terms, and make sure that all necessary legal documents are prepared (and reviewed) to make sure that the papers you sign reflect the deal points. Good attorneys will be team players, working well with your other professional advisors and helping you make informed decisions along the way.

CPA or Tax Lawyer
As noted several times on this blog, selling a business often carries a potentially hefty tax bill. While you may not be able to avoid the taxman completely, a competent tax professional can estimate the likely federal and state tax liability and help you take steps to reduce, or at least be able to pay, those taxes when they come due.

Estate Planning Attorney
Selling a business is a major event in most people’s lives. As with getting married (or divorced) and having kids, it’s a step that needs to be reflected in updated estate planning documents. Whether you have a simple will or a complex trust, it’s important to advise your estate planning attorney of your intention to sell so he or she can work with your financial planner to craft appropriate documents. And if you don’t have an estate plan yet, it’s definitely time to create one.

Financial Planner
Business owners often need help figuring out how to meet their financial goals. As we’ve seen in Business Killers, it’s important to have a separate stream of income to help fund retirement instead of reinvesting every dollar back into the business. A savvy planner also can assist owners as they begin taking steps to improve the value of the company. For example, if an owner needs to reduce excessive expenses that cut into net earnings, a financial planner may be able to soften the blow by “finding” hidden money in a personal budget.

Business Valuation Expert
It goes without saying that you won’t be able to price your business for sale if you don’t know what it’s worth. In addition, if you are entering into or updating a buy-sell agreement, you need to know how much money is needed to pay off a departing or deceased owner. Business valuation experts can provide an initial “back of the envelope” estimate or engage in a full-blown valuation.

Intellectual Property Attorney
If your business assets include patents, trademarks or copyrights, you’ll need competent legal counsel to advise you on how to protect your intellectual property. Many business attorneys are able to address trademark or copyright questions, but patent lawyers must sit for a separate bar examination before they can advise clients about applying for, maintaining or enforcing patent rights. Make sure you ask your attorney how much experience he or she has in these areas and get multiple referrals so that you are comfortable with the attorney you choose.

Insurance Advisor
Every business needs adequate insurance protection to manage risk. A good insurance broker who understands your industry is essential for making sure that you have the appropriate types of coverage and enough of it.

As the old Mark Twain saying goes, a banker is someone who will lend you an umbrella when it’s sunny, but wants it back the minute it starts to rain. Most businesses that have weathered the Great Recession understand this well. Although the economy appears to be moving in the right direction now, it’s still important to establish lending relationships. For businesses that are getting ready to sell, it may be necessary to upgrade equipment, make improvements or repairs to real estate, or increase market share. Having the right lender can help make it easier to borrow funds to handle those expenses.

If you’re looking for someone to help you in any of these areas, check with fellow business owners or ask for a referral from your own attorney, CPA or other professional who knows your business. Each transaction is unique, and some of these roles may overlap or be unnecessary in your situation. Actual mileage may vary.

Business Killers Wrap Up: How Can You Learn More?

Business Killers Wrap Up: How Can You Learn More?


If you’re interested in learning more about Business Killers, my friends Mark Baker and Lisa Brumm of AXA Advisors have scheduled a series of ongoing free presentations in the Umpqua Bank Plaza located at One SW Columbia Street in downtown Portland. The presentations occur monthly and last approximately 90 minutes. They are geared to business owners and other executives. Lunch is provided and you will have the opportunity to engage with Mark and Lisa as well as other professionals who are part of the local Business Killers team. If it’s not convenient to travel downtown at midday, Mark and Lisa are also available to provide private screenings at your office.

Attending a presentation lets you assess how well your company is prepared to deal with each of the six “Business Killer” mistakes referenced in our previous blog posts. You’ll discuss possible outcomes and explore “what-if” scenarios for each mistake. You’ll also hear from third-party consultants in each video vignette who provide additional information to enhance your understanding of the issues in play.

As part of the presentation, each participant will prepare a self-assessment to evaluate your own level of risk. And if your company is vulnerable in one or more areas, you’ll learn about solutions for each mistake.

Best of all, there is no selling. The program is purely informational and intended to increase awareness of potential obstacles to success.

For more information, contact Mark Baker mark.baker@axa-advisors.com or Lisa Brumm lisa.brumm@axa-advisors.com.

Business Killer #6	Don’t Forget About Uncle Sam

Business Killer #6 Don’t Forget About Uncle Sam

unclesam-worldwarii-poster-6201140-o (1)

As business owners, we probably pay more in taxes than we’d like. Plus the rules about exemptions, regulations, fees, and taxes seem to change constantly. But with the changing tax environment comes opportunities to reduce your tax burden if you know where to look. Early planning, however, is required to make the most of this strategy.

The final installment of the Business Killers educational series shows that even successful business owners still need to navigate potentially rough seas to reach their final destination without losing too much of the value that they may have spent years to build.

The scene opens on a business owner in his early 60s meeting with an advisor. The business has successfully acquired another company and profits continue to accumulate as part of healthy business growth.

All of the growth means increased income for the owner, and with it, a significantly higher tax bill. He’s frustrated about what he perceives as a disincentive to success. And with retirement not too far away, the advisor warns him that a sale of the business will result in a much larger tax bill than the one he’s bothered about now. “Stop trying to cheer me up,” the owner half-jokes in frustration.

Having to pay taxes on money that you’ve earned may sound like a “first world problem.” And it’s certainly true that paying taxes because your business is successful is almost always better than not paying taxes because your business is losing money. But there is no reason to pay more taxes than necessary.

Tax Planning is Part of Your Exit Strategy

Tax planning is an important but sometimes overlooked part of an exit strategy. The more time you have to plan, the more likely you are to achieve the results you want. The amount of tax owed from the sale of a business depends upon whether the sale proceeds are taxed as ordinary income or capital gains. Profits from the sale of business assets likely will be taxed at capital gains rates, but money paid to an owner for transition consulting services probably will be taxed as ordinary income. And as discussed in an earlier post, the structure of the transaction (stock sale v. asset sale, allocation of purchase price, etc.) will also have consequences.

In this case, the owner isn’t stepping down tomorrow, but he won’t be working another 10 years either. For him, and for any of you who plan to sell your business, it’s not too early to begin working with your team to estimate the likely tax bite from a sale of the company and come up with a plan to fund that liability.

Business Killer #5: My Business is my Retirement

Business Killer #5: My Business is my Retirement


All business owners invest in their growing businesses and hope that their hard work will ensure a comfortable retirement. But changing times, technological advances, and an increasingly global economy may wreak havoc on those plans.

In the next Business Killers vignette, a sleepless older man is sitting up in bed. His wife asks him what’s wrong and he confesses that he might not be able to sell his business to fund their retirement. Apparently a large international firm has entered the market and is buying up raw materials and undercutting prices. As a result, the prospective buyers that had expressed interest in his company have pulled back. And while he could sell out to the big international competitor, they would only give him about half of what he thought his company was worth. Any retailer who’s dealt with a big box store or a Wal-Mart entering the neighborhood knows that this scenario isn’t good for a small business owner. Now he’s kicking himself for not listening to his financial advisor, who has been encouraging him to diversify his assets instead of plowing all his money back into the business.

Future-proof Your Business

Two takeaways are worth noting. The first is what my friend Steve Bergman, a consultant with Teleconvergence, calls the need for “future-proofing” your business. Steve has developed a few maxims to help business owners understand trends that may affect their industry. According to Steve:

• if it’s wired, it will become wireless;
• if it’s fixed it will become mobile;
• if it’s wireless or mobile, it will become intelligent;
• if it’s intelligent, it will become shared;
• if it starts as a product, it won’t stay that way indefinitely; in turn it will be
• bundled, then
• interfaced, then
• integrated; then
• combined to become multi-functional
• then become firmware
• then become software
• then lose all identity and become an application or a service.

A Failure to Plan is a Plan for Failure

In the Business Killers example, it may not have been obvious that this particular international firm would get into the business, but it probably didn’t take a lot of insight to figure out that competition is always a potential threat. The second is that regardless of how successful a business you are running, you need to begin planning your exit strategy years in advance of the actual retirement.

Had our business owner heeded his financial planner’s advice, he would have set aside money to help fund his retirement from the outset, thus leaving him less dependent on a sale of the business. In addition, he would have been working with a business broker or perhaps a business coach or consultant to develop an exit strategy that might have avoided the “fire sale” that he is likely facing.

Again, a failure to plan has turned into a plan for failure. Don’t let it happen to you – whether you are just starting a new business or nearing retirement, it pays to talk with professionals who can help you realize the wealth that you are creating.

Business Killer #4: There’s Plenty of Time for That

Business Killer #4: There’s Plenty of Time for That


So far, we’ve killed off two business owners and left another one with a disability. In the remaining Business Killers installments, the owners are alive and healthy – but they’re still capable of making potentially fatal mistakes.

An art gallery is owned and operated by an older man whose daughter works for him. The scene opens with the daughter mentioning that her friend Jeff just found out that the family business he had planned to take over had been sold. Although the intention was to keep it in the family, Jeff’s father had put all his money into the business and needed to sell to fund his retirement.

The daughter is concerned because her own father has reinvested most of the art gallery profits into the business. She’s worried that she could end up like Jeff and urges her father to develop a viable succession plan for the gallery. But he isn’t interested in taking the time to do so, and tells her not to worry. Besides, he says, hasn’t he always taken care of her? Famous last words…


Most owners assume they will have time for business planning later. After all, they are running a business which can demand all of their attention. But as noted in the previous scenarios, not planning for business succession – especially in family-owned companies – is one of the major reasons why businesses fail when the founder leaves.

Not having a clear succession plan creates ambiguity at best and a vicious power struggle or inability to continue operating the company at worst. Founders need to have a reliable successor who is already groomed to take over. This means someone who has the technical and managerial skills to run the business. It also means transitioning key vendor and customer relationships ahead of time to ensure continuity of operations without the founder.

As we’ll explore in more detail in the next post, a family business owner also needs to ensure that he or she is financially able to retire while preserving jobs for other family members who want to continue working in the business.