Business, Taxes

A road map for selling a closely held business: Part 1

According to a recent UBS survey, 41 percent of closely held business owners expect to exit their businesses in the next five years. This presents a liquidity event that could be a the greatest opportunity in a generous giver’s lifetime to use what they have for good.

Many of the business owners in this study were baby boomers who are at or beyond traditional retirement age. Other business owners who weren’t necessarily looking to retire said they believed that current economic conditions would boost their chances of selling at a favorable price.

This means that over the next five years, millions of closely held businesses will potentially be sold in the United States. Advisors have an obligation to help clients through the process of selling their businesses. Often, the process of selling a business is unknown to the business owner. This leaves her vulnerable to making significant mistakes.

So here’s part 1 of a road map for helping clients to facilitate the sale of a closely held business.


Timing of the sale

Getting the timing right when selling a business can have a significant impact on the sales price. Where we are in the business cycle really matters. If your client sold her business in 2006, when multiples were high, she could have gotten a high sales price. Fast-forward a few years to 2009 or 2010, and if your client could even find a buyer, the prices being paid were among the lowest in years.

Recently, the mergers and acquisitions industry has seen a great deal of activity, and multiples are as high or higher than they’ve ever been. Corporations and private equity firms have almost unprecedented amounts of cash on hand to make acquisitions. This seems like a good time to sell a well-positioned, closely held business.

Read the full story at Wealth Management. 
Up Next

How New Orleans reduced its homeless population by 90 percent

Read Now
Editor's note: Stories appearing on NCF's website from third-party contributors are intended for informational purposes only, and we do not endorse or approve the content, services, products, or theological teachings they contain. Any questions or concerns may be directed to the original publisher of such third-party content.

Sign up for our
Saturday 7 email digest (learn more)

Join 40,000+ subscribers who receive our email digest of the
week's top stories from ncfgiving.com. We call it Saturday 7.

Read our privacy policy

×