The following case study is based on a true story. For owners of closely held businesses, this case study highlights the importance of engaging an experienced and professional exit planning team. Even when an exit plan looks like it will work at a high level for all parties involved, there are often hidden problems and issues that can cost the exiting owner millions of dollars. Therefore, we recommend that all business owners seek help from professional exit planners, like our NAVIX Consultants.

Key Lessons:

One of the four possible exit strategies is to sell the company to an inside buyer, such as a business partner or a key employee. At NAVIX, we call this an “Innie” Exit Strategy. A key risk for this type of transaction is excess taxation.

• Transaction Taxes – Funds bonused to the employees for the buyout will be taxed as ordinary income, and then taxed again at capital gains rates when they are paid to the outgoing owner.
• Estate Taxes – If the owner has significant other assets, the transaction proceeds may get taxed again at the estate tax rate, which is currently set at 40% for most taxpayers.
• Control – If payments are going to be made over time, the exiting owner will need to retain some form of control over the company.
• Professional Help – Most business owners do not have the expertise and experience to know all the potential risks and opportunities associated with exiting their business. They should seek help from a professional exit planning team.

Download the case study: navix-case-study-save-a-million-twice

save-a-million-twice

Once you decide that your exit strategy is selling your business to an inside buyer, we call that being an “Innie”, you need to gear yourself for a successful transition. It is never too early to start the planning process. As buyers, key employees can threaten the success of the sale of your business.

In our experience, there are twelve essential conditions that Innies must meet in order to achieve a happy exit. Download the NAVIX Exit Strategy Checklist- Selling to an Inside Buyer and watch the video below to evaluate how viable selling your business to an inside buyer may be. Use the checklist as a guideline to identify actions that will help you achieve a successful exit using this strategy.

Contact us to learn more about a customized plan for your successful exit – all inquiries are confidential.

Watch the video below and download the complimentary case studies.

For more information on this subject, read these two case studies:

An Exit Planning Case Study: Third Time is the Charm

An Exit Planning Case Study: The Best Deals are the Ones You Don’t Do

Contact us  to learn more about planning and achieving your own happy exit.

The 12 Steps Required to Successfully Sell Your Business to an Inside Buyer 7 2016