Succession by Sale; Preparing Your Business

The succession plan for many owners of closely held businesses is a sale.  So often, the due diligence period with a buyer will reveal issues that thwart or delay sales and result in higher transactional costs.  In order to minimize the potential for such a result and have a successful sale, owners should proactively do a little spring cleaning before engaging with a buyer.  These steps may include:

1. Consider tax and estate planning initiatives to minimize the tax impact of a sale and further the goals of your estate plan.

2. Conduct a self-audit of your human resources, tax and environmental (as applicable) compliance.

3. Assess the level to which you have secured the most valuable assets of your company whether that be key personnel through restrictive covenants or trademark, copyright and patent rights and whether additional efforts will increase value.

4. Evaluate the best approach to maximize value and position a sale – whether that be an asset or a stock sale.

As with preparing for any major transition, assemble a strong professional team to guide you through the process.

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About the Author

Yasmeen S. Khaleel, Esq. is an Executive Committee Member and Chair of Capehart Scatchard's Business & Tax and Wills, Trust & Estates Groups. Ms. Khaleel concentrates her practice in the representation of individuals, business owners, medical, dental and other professionals in the areas of estate planning, estate and trust administration, business succession planning, transactional and tax planning. She routinely handles matters of special needs planning including guardianship applications. Additionally, Ms. Khaleel has experience in complex business, estate and trust litigation matters in conjunction with the Litigation Group.

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