Directions BUSINESS REPLY MAIL POSTAGE WILL BE PAID BY ADDRESSEE. Planning an Exit Strategy

Transcription

1 ADVANCEMENT FIRST-CLASS MAILPOLYTECHNIC PERMIT NO LONG BEACH CA 3801 TEMPLE AVE ADVANCEMENT POSTAGE WILL BE PAID BY ADDRESSEE POLYTECHNIC ADVANCEMENT 3801 WEST TEMPLE AVE POLYTECHNIC CAADVANCEMENT POLYTECHNIC Directions Planning and Giving Stategies for Business Owners Winter 2017 DEAR FRIEND, Very few of us take on an important task or activity without an appropriate amount of preparation from vacations to buying a home or creating a will, we benefit Planning an Exit Strategy from planning ahead and knowing what It is not the strongest or the most intelligent who will survive but those who can best manage change. we want to accomplish. The importance - Leon C. Megginson or complexity of what we need to do determines how we prepare. Exiting your business reuires the same careful attention that was invested in When you re finished changing, you re finished. - Ben Franklin Planning is a process. Over time you may revisit your business exit plans and perhaps change course but it is important to keep the process moving, as the time will inevitably come when you must put your transition plans into play. Did you know that Cal Poly Pomona s team of seasoned professionals has assisted many business owners in establishing and executing their succession strategies? We invite you to learn more about how a planned gift to us offers significant opportunities for tax savings that will both enhance your transition plans and shape your legacy. The information contained in this newsletter is for informational purposes only and does not constitute legal or tax advice. Please consult your own counsel with any uestions. starting and building the business. In this issue of Directions, we look at key Please contact us for more information. Simply return the attached card, call us or us. We can help. (909) dewood@cpp.edu considerations in developing your strategy and the importance of forming helpful partnerships to make your plan work. Please let me know if you would like to have additional information, and thank you for considering Cal Poly Pomona in your planning. Sincerely yours, Please consider making a gift to Cal Poly Pomona in your estate Evolution teaches us that only the fittest survive a principle that has applicability in the economic world as well as the biological. Businesses emerge and fade and successful leaders are skilled at adapting to and managing change. It should come as no surprise, then, that smooth and effective business transitions rarely happen spontaneously. When the time comes to leave your business in the hands of others, your success depends on the extent to which you plan. Many exit strategy options exist and choosing is no simple matter; in fact, the choices can prove overwhelming. How do you begin planning? What direction should you take? Who can you rely on for guidance? The answers to these uestions begin with where you are now, what you want to accomplish, and how you envision your legacy. It s never too early to plan an exit strategy. But, like many important events in our lives, it often doesn t happen until time is short and options are few. Here are some guiding thoughts, along with ways that Cal Poly can help you in the process. (read more on page 2)

2 Will I need to look outside the organization for expertise? How will such individuals be adeuately vetted? Will I transfer the business to family members? This process is best started with ample time to organize a comprehensive strategy. The amount of time necessary to be successful will depend on your needs, but is typically a function of the number of people being groomed, training and recruiting needs, and ancillary issues such as establishing guidelines for overall compensation and benefits. Drawing Up a Plan You have had much success over your working career and very likely want to stay involved with your business. While the prospect of winding down your day-to-day activities may not seem appealing, bear in mind that good stewardship of your business calls you to carefully navigate this important transition. You know your business better than anyone. Imagine a best case scenario for its continuation. You can begin by choosing between two fundamental options establishing new leadership over time or selling the business outright. Let s consider these two alternatives. Planning for new leadership affords many business owners the flexibility of choosing to continue working in some capacity, such as through a consulting relationship. With this option, the eventual move from an active role may prove less distressing. In such cases, it is essential to have an exit plan in place with future owners for example, through a buy-sell agreement. If you plan to leave the business to family members, your estate plan also comes into play. Selling Your Business. Whether you sell your business to a company, your employees, a competitor or a private euity firm, selling New Leadership. Does your strategy hinge on replacing a person, with the organization remaining intact and independent? For many small businesses, replacing an owner, CEO or other senior executive is the key to keeping the business thriving. Keeping track of and preparing individuals for leadership roles is essential, whether the transition is orderly or due to sudden death or incapacity. Ask uestions such as: Have I identified the core talents and competencies needed for key positions? 2 Have I developed a pipeline of talent that will produce individuals with leadership potential? What safeguards are in place to retain their services? What programs or other support can I offer to current employees that will enhance their future abilities to lead? Directions Winter 2017 under favorable circumstances can result in great financial gains. Yet, successful sales can be extraordinarily difficult to accomplish. Two particular factors contribute significantly to a successful outcome: Preparation Again, the earlier you begin preparing, the better. While you cannot control the economic factors that may influence the sale, the better you prepare, the more likely you will be able to take advantage of favorable conditions when they arrive. Bear in mind that preparation can be laborious and time consuming. For example, you may need to create manuals, produce or review contracts or leases, unearth tax returns, and so on. This is not glamorous work, but will smooth the sales process by providing evidence of your good faith and demonstrating due diligence. Timing Over the years, you have gained an intimate understanding of the ebb and flow of your business cycle. To the extent feasible, then, you can time the transition to coincide with a favorable climate to make the sale of your business easier and more profitable. Of course, savvy buyers are much more likely to be impressed by a record of steady growth than a sudden, coincidental increase in profitability close to a sale. Parterning Outside of deciding the basic goals of your exit strategy, selecting trusted allies to help navigate the transition is perhaps the most important decision you will make. Seasoned partners with experience in your field can provide competent help with many essential services, including spending the necessary time to assist your organization in finding an appropriate buyer, whether that person is a family member, key employee, or someone outside of the business. Look for an ally who can demonstrate a track record of success in prior endeavors and a depth of experience in the following areas: Prepare your strategy Cal Poly Pomona can help you reach your goals Check all that apply. Valuation A professional valuation of your business is essential, as over-valuing your business can drive away potential buyers while undervaluing can leave you with less gain than you deserve. Valuation is also important when transferring a business to family members, as there will not only be the income and capital gains tax issues that come with any sale, but estate tax implications as well. Documentation Insurance contracts, employment records, retirement accounts, and tax returns are just some of the documents that need to be organized and available for inspection as a business changes hands. When such records are in disarray, the clutter will deter potential buyers. Choose an advisor who knows how to categorize documents in terms of their relative importance to the transition and is able to determine whether they are legally sufficient. I am interested in knowing more about strategic options for business transitions. I have uestions about taxation of business assets. My business transition is already underway and I am interested in ways I might support Cal Poly Pomona. Please send an example of how a gift to Cal Poly Pomona can provide once-in-a-lifetime tax advantages as part of a business exit strategy. NAME ADDRESS Legal Issues No doubt you have long-established ties with legal counsel, as this is an essential relationship in today s world. While it is not the job of a transition partner to assume direct legal responsibilities, you should look for someone who will be sensitive to the wide array of legal issues that surround a business transition preferably someone with attorneys on the team who can share their expertise with transition issues. Incidentally, the same philosophy goes for accounting skills. CITY, ZIP TELEPHONE Consulting General consulting advice with regard to the pace and structure of your plan is invaluable. Going solo with a plan can be exhausting and dangerous. The right partner can keep you on track. Planning and Giving Strategies for Business Owners Detach at the perforation and fold in half to close. Tape to seal prior to mailing. 3 DMPGBUSINESS3

3 Will I need to look outside the organization for expertise? How will such individuals be adeuately vetted? Will I transfer the business to family members? This process is best started with ample time to organize a comprehensive strategy. The amount of time necessary to be successful will depend on your needs, but is typically a function of the number of people being groomed, training and recruiting needs, and ancillary issues such as establishing guidelines for overall compensation and benefits. Drawing Up a Plan You have had much success over your working career and very likely want to stay involved with your business. While the prospect of winding down your day-to-day activities may not seem appealing, bear in mind that good stewardship of your business calls you to carefully navigate this important transition. You know your business better than anyone. Imagine a best case scenario for its continuation. You can begin by choosing between two fundamental options establishing new leadership over time or selling the business outright. Let s consider these two alternatives. Planning for new leadership affords many business owners the flexibility of choosing to continue working in some capacity, such as through a consulting relationship. With this option, the eventual move from an active role may prove less distressing. In such cases, it is essential to have an exit plan in place with future owners for example, through a buy-sell agreement. If you plan to leave the business to family members, your estate plan also comes into play. Selling Your Business. Whether you sell your business to a company, your employees, a competitor or a private euity firm, selling New Leadership. Does your strategy hinge on replacing a person, with the organization remaining intact and independent? For many small businesses, replacing an owner, CEO or other senior executive is the key to keeping the business thriving. Keeping track of and preparing individuals for leadership roles is essential, whether the transition is orderly or due to sudden death or incapacity. Ask uestions such as: Have I identified the core talents and competencies needed for key positions? 2 Have I developed a pipeline of talent that will produce individuals with leadership potential? What safeguards are in place to retain their services? What programs or other support can I offer to current employees that will enhance their future abilities to lead? Directions Winter 2017 under favorable circumstances can result in great financial gains. Yet, successful sales can be extraordinarily difficult to accomplish. Two particular factors contribute significantly to a successful outcome: Preparation Again, the earlier you begin preparing, the better. While you cannot control the economic factors that may influence the sale, the better you prepare, the more likely you will be able to take advantage of favorable conditions when they arrive. Bear in mind that preparation can be laborious and time consuming. For example, you may need to create manuals, produce or review contracts or leases, unearth tax returns, and so on. This is not glamorous work, but will smooth the sales process by providing evidence of your good faith and demonstrating due diligence. Timing Over the years, you have gained an intimate understanding of the ebb and flow of your business cycle. To the extent feasible, then, you can time the transition to coincide with a favorable climate to make the sale of your business easier and more profitable. Of course, savvy buyers are much more likely to be impressed by a record of steady growth than a sudden, coincidental increase in profitability close to a sale. Parterning Outside of deciding the basic goals of your exit strategy, selecting trusted allies to help navigate the transition is perhaps the most important decision you will make. Seasoned partners with experience in your field can provide competent help with many essential services, including spending the necessary time to assist your organization in finding an appropriate buyer, whether that person is a family member, key employee, or someone outside of the business. Look for an ally who can demonstrate a track record of success in prior endeavors and a depth of experience in the following areas: Prepare your strategy Cal Poly Pomona can help you reach your goals Check all that apply. Valuation A professional valuation of your business is essential, as over-valuing your business can drive away potential buyers while undervaluing can leave you with less gain than you deserve. Valuation is also important when transferring a business to family members, as there will not only be the income and capital gains tax issues that come with any sale, but estate tax implications as well. Documentation Insurance contracts, employment records, retirement accounts, and tax returns are just some of the documents that need to be organized and available for inspection as a business changes hands. When such records are in disarray, the clutter will deter potential buyers. Choose an advisor who knows how to categorize documents in terms of their relative importance to the transition and is able to determine whether they are legally sufficient. I am interested in knowing more about strategic options for business transitions. I have uestions about taxation of business assets. My business transition is already underway and I am interested in ways I might support Cal Poly Pomona. Please send an example of how a gift to Cal Poly Pomona can provide once-in-a-lifetime tax advantages as part of a business exit strategy. NAME ADDRESS Legal Issues No doubt you have long-established ties with legal counsel, as this is an essential relationship in today s world. While it is not the job of a transition partner to assume direct legal responsibilities, you should look for someone who will be sensitive to the wide array of legal issues that surround a business transition preferably someone with attorneys on the team who can share their expertise with transition issues. Incidentally, the same philosophy goes for accounting skills. CITY, ZIP TELEPHONE Consulting General consulting advice with regard to the pace and structure of your plan is invaluable. Going solo with a plan can be exhausting and dangerous. The right partner can keep you on track. Planning and Giving Strategies for Business Owners Detach at the perforation and fold in half to close. Tape to seal prior to mailing. 3 DMPGBUSINESS3

4 ADVANCEMENT FIRST-CLASS MAILPOLYTECHNIC PERMIT NO LONG BEACH CA 3801 TEMPLE AVE ADVANCEMENT POSTAGE WILL BE PAID BY ADDRESSEE POLYTECHNIC ADVANCEMENT 3801 WEST TEMPLE AVE POLYTECHNIC CAADVANCEMENT POLYTECHNIC Directions Planning and Giving Stategies for Business Owners Winter 2017 DEAR FRIEND, Very few of us take on an important task or activity without an appropriate amount of preparation from vacations to buying a home or creating a will, we benefit Planning an Exit Strategy from planning ahead and knowing what It is not the strongest or the most intelligent who will survive but those who can best manage change. we want to accomplish. The importance - Leon C. Megginson or complexity of what we need to do determines how we prepare. Exiting your business reuires the same careful attention that was invested in When you re finished changing, you re finished. - Ben Franklin Planning is a process. Over time you may revisit your business exit plans and perhaps change course but it is important to keep the process moving, as the time will inevitably come when you must put your transition plans into play. Did you know that Cal Poly Pomona s team of seasoned professionals has assisted many business owners in establishing and executing their succession strategies? We invite you to learn more about how a planned gift to us offers significant opportunities for tax savings that will both enhance your transition plans and shape your legacy. The information contained in this newsletter is for informational purposes only and does not constitute legal or tax advice. Please consult your own counsel with any uestions. starting and building the business. In this issue of Directions, we look at key Please contact us for more information. Simply return the attached card, call us or us. We can help. (909) dewood@cpp.edu considerations in developing your strategy and the importance of forming helpful partnerships to make your plan work. Please let me know if you would like to have additional information, and thank you for considering Cal Poly Pomona in your planning. Sincerely yours, Please consider making a gift to Cal Poly Pomona in your estate Evolution teaches us that only the fittest survive a principle that has applicability in the economic world as well as the biological. Businesses emerge and fade and successful leaders are skilled at adapting to and managing change. It should come as no surprise, then, that smooth and effective business transitions rarely happen spontaneously. When the time comes to leave your business in the hands of others, your success depends on the extent to which you plan. Many exit strategy options exist and choosing is no simple matter; in fact, the choices can prove overwhelming. How do you begin planning? What direction should you take? Who can you rely on for guidance? The answers to these uestions begin with where you are now, what you want to accomplish, and how you envision your legacy. It s never too early to plan an exit strategy. But, like many important events in our lives, it often doesn t happen until time is short and options are few. Here are some guiding thoughts, along with ways that Cal Poly can help you in the process. (read more on page 2)

5 Will I need to look outside the organization for expertise? How will such individuals be adeuately vetted? Will I transfer the business to family members? This process is best started with ample time to organize a comprehensive strategy. The amount of time necessary to be successful will depend on your needs, but is typically a function of the number of people being groomed, training and recruiting needs, and ancillary issues such as establishing guidelines for overall compensation and benefits. Drawing Up a Plan You have had much success over your working career and very likely want to stay involved with your business. While the prospect of winding down your day-to-day activities may not seem appealing, bear in mind that good stewardship of your business calls you to carefully navigate this important transition. You know your business better than anyone. Imagine a best case scenario for its continuation. You can begin by choosing between two fundamental options establishing new leadership over time or selling the business outright. Let s consider these two alternatives. Planning for new leadership affords many business owners the flexibility of choosing to continue working in some capacity, such as through a consulting relationship. With this option, the eventual move from an active role may prove less distressing. In such cases, it is essential to have an exit plan in place with future owners for example, through a buy-sell agreement. If you plan to leave the business to family members, your estate plan also comes into play. Selling Your Business. Whether you sell your business to a company, your employees, a competitor or a private euity firm, selling New Leadership. Does your strategy hinge on replacing a person, with the organization remaining intact and independent? For many small businesses, replacing an owner, CEO or other senior executive is the key to keeping the business thriving. Keeping track of and preparing individuals for leadership roles is essential, whether the transition is orderly or due to sudden death or incapacity. Ask uestions such as: Have I identified the core talents and competencies needed for key positions? 2 Have I developed a pipeline of talent that will produce individuals with leadership potential? What safeguards are in place to retain their services? What programs or other support can I offer to current employees that will enhance their future abilities to lead? Directions Winter 2017 under favorable circumstances can result in great financial gains. Yet, successful sales can be extraordinarily difficult to accomplish. Two particular factors contribute significantly to a successful outcome: Preparation Again, the earlier you begin preparing, the better. While you cannot control the economic factors that may influence the sale, the better you prepare, the more likely you will be able to take advantage of favorable conditions when they arrive. Bear in mind that preparation can be laborious and time consuming. For example, you may need to create manuals, produce or review contracts or leases, unearth tax returns, and so on. This is not glamorous work, but will smooth the sales process by providing evidence of your good faith and demonstrating due diligence. Timing Over the years, you have gained an intimate understanding of the ebb and flow of your business cycle. To the extent feasible, then, you can time the transition to coincide with a favorable climate to make the sale of your business easier and more profitable. Of course, savvy buyers are much more likely to be impressed by a record of steady growth than a sudden, coincidental increase in profitability close to a sale. Parterning Outside of deciding the basic goals of your exit strategy, selecting trusted allies to help navigate the transition is perhaps the most important decision you will make. Seasoned partners with experience in your field can provide competent help with many essential services, including spending the necessary time to assist your organization in finding an appropriate buyer, whether that person is a family member, key employee, or someone outside of the business. Look for an ally who can demonstrate a track record of success in prior endeavors and a depth of experience in the following areas: Prepare your strategy Cal Poly Pomona can help you reach your goals Check all that apply. Valuation A professional valuation of your business is essential, as over-valuing your business can drive away potential buyers while undervaluing can leave you with less gain than you deserve. Valuation is also important when transferring a business to family members, as there will not only be the income and capital gains tax issues that come with any sale, but estate tax implications as well. Documentation Insurance contracts, employment records, retirement accounts, and tax returns are just some of the documents that need to be organized and available for inspection as a business changes hands. When such records are in disarray, the clutter will deter potential buyers. Choose an advisor who knows how to categorize documents in terms of their relative importance to the transition and is able to determine whether they are legally sufficient. I am interested in knowing more about strategic options for business transitions. I have uestions about taxation of business assets. My business transition is already underway and I am interested in ways I might support Cal Poly Pomona. Please send an example of how a gift to Cal Poly Pomona can provide once-in-a-lifetime tax advantages as part of a business exit strategy. NAME ADDRESS Legal Issues No doubt you have long-established ties with legal counsel, as this is an essential relationship in today s world. While it is not the job of a transition partner to assume direct legal responsibilities, you should look for someone who will be sensitive to the wide array of legal issues that surround a business transition preferably someone with attorneys on the team who can share their expertise with transition issues. Incidentally, the same philosophy goes for accounting skills. CITY, ZIP TELEPHONE Consulting General consulting advice with regard to the pace and structure of your plan is invaluable. Going solo with a plan can be exhausting and dangerous. The right partner can keep you on track. Planning and Giving Strategies for Business Owners Detach at the perforation and fold in half to close. Tape to seal prior to mailing. 3 DMPGBUSINESS3

6 ADVANCEMENT FIRST-CLASS MAILPOLYTECHNIC PERMIT NO LONG BEACH CA 3801 TEMPLE AVE ADVANCEMENT POSTAGE WILL BE PAID BY ADDRESSEE POLYTECHNIC ADVANCEMENT 3801 WEST TEMPLE AVE POLYTECHNIC CAADVANCEMENT POLYTECHNIC Directions Planning and Giving Stategies for Business Owners Winter 2017 DEAR FRIEND, Very few of us take on an important task or activity without an appropriate amount of preparation from vacations to buying a home or creating a will, we benefit Planning an Exit Strategy from planning ahead and knowing what It is not the strongest or the most intelligent who will survive but those who can best manage change. we want to accomplish. The importance - Leon C. Megginson or complexity of what we need to do determines how we prepare. Exiting your business reuires the same careful attention that was invested in When you re finished changing, you re finished. - Ben Franklin Planning is a process. Over time you may revisit your business exit plans and perhaps change course but it is important to keep the process moving, as the time will inevitably come when you must put your transition plans into play. Did you know that Cal Poly Pomona s team of seasoned professionals has assisted many business owners in establishing and executing their succession strategies? We invite you to learn more about how a planned gift to us offers significant opportunities for tax savings that will both enhance your transition plans and shape your legacy. The information contained in this newsletter is for informational purposes only and does not constitute legal or tax advice. Please consult your own counsel with any uestions. starting and building the business. In this issue of Directions, we look at key Please contact us for more information. Simply return the attached card, call us or us. We can help. (909) dewood@cpp.edu considerations in developing your strategy and the importance of forming helpful partnerships to make your plan work. Please let me know if you would like to have additional information, and thank you for considering Cal Poly Pomona in your planning. Sincerely yours, Please consider making a gift to Cal Poly Pomona in your estate Evolution teaches us that only the fittest survive a principle that has applicability in the economic world as well as the biological. Businesses emerge and fade and successful leaders are skilled at adapting to and managing change. It should come as no surprise, then, that smooth and effective business transitions rarely happen spontaneously. When the time comes to leave your business in the hands of others, your success depends on the extent to which you plan. Many exit strategy options exist and choosing is no simple matter; in fact, the choices can prove overwhelming. How do you begin planning? What direction should you take? Who can you rely on for guidance? The answers to these uestions begin with where you are now, what you want to accomplish, and how you envision your legacy. It s never too early to plan an exit strategy. But, like many important events in our lives, it often doesn t happen until time is short and options are few. Here are some guiding thoughts, along with ways that Cal Poly can help you in the process. (read more on page 2)