Exiting your business Private Wealth Management

Over the last 30 years, we have learned that to our clients business is personal. Your business is your passion. It is likely one of the greatest accomplishments of your life. So when you consider stepping back, there is a lot at stake—your family’s financial future, your employees’ livelihood, and, of course, the legacy you have worked so hard to create.

Selling a business can be a time of uncertainty; however, it should really be all about optimism and new possibilities—with sights clearly set on the best possible terms, transition and strategy for whatever comes next. For us, there is no greater priority than helping business owners plan a thoughtful and holistic exit strategy, so they can take life’s next big step with the same passion that helped them build their business in the first place. We have advised hundreds of business owners throughout the country who have trusted our ability to help them achieve the best outcomes for their families, employees and those next in line.

Read our guide to exiting your business

The full life cycle of your business

Though many business owners have an idea about what their future may hold, few have developed a plan. Your expertise has been focused on running and growing your successful business. Ideally, planning for a business transition begins years in advance. We can provide you with a plan of action for how best to sell it. The earlier you start to plan your transition strategy, the better the outcome will be, even if it is many years in the future.

  • Why do you want to sell your business?
  • What are your desired financial objectives?
  • Do you have a realistic picture of the net after-tax sale proceeds to help determine the most advantageous way to structure the sale for tax purposes?
  • Are there activities you and your team can accomplish in the near term to maximize the value of your business before sale?
  • Are all the company’s financial statements and tax/legal records in order so a prospective buyer can get a clear view of your actual financial performance?
  • Do you have a good understanding of how your company is currently valued within your industry?
  • Are there any outstanding legal, compliance or regulatory issues that require attention?
  • Do you have a comprehensive risk management assessment for the business?
  • Is there a strong management structure and succession plan?
  • If it’s a family business, have you come to an understanding with the next generation on roles and responsibilities?

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Planning for the sale of a closely held business

If you have come to the decision to sell your business, our team can help. Just like you, we obsess over every detail. We will take into account the market, the value, the timing, the buyers and the most important asset of all: you. It’s done according to your terms—and no one else’s—because it’s your business and it’s personal.

Count on our team to:

  • Understand your current situation and objectives, taking into account lifestyle and income planning after the sale
  • Assist you in selecting a team of trusted advisors (CPA, attorney, investment banker, etc.) to help you prepare the business
  • Determine the optimal sale structure and reduce unnecessary tax burdens
  • Present proprietary future cash flow and tax projections
  • Deliver a comprehensive analysis of your estate plan (balance sheet compilation, estate mapping and tax calculation, income and tax planning, insurance review, etc.)
  • Collaborate with your tax and legal counsel to align our recommendations to your estate plan and pre-sale philanthropic giving

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Boutique Investment Bank Network

Business transition options

Third-party sale
Sell a minority or controlling interest in your business to a strategic or financial buyer. Your decision will be largely dependent on the premium paid, desire to capture future upside potential and control.

Recapitalization
Sell a minority or majority equity stake in the company for asset diversification and liquidity, or issue debt at the company level and use the cash received to buy back shares and/or issue a dividend to shareholders.

Employee Stock Ownership Plan (ESOP)
Sell your business to your employees through a minority or majority tax-advantaged leveraged buyout.

Transition ownership to the next generation or management
Transition ownership to family members or management by way of a structured sale, gift or a combination of both.

When it comes to the wealth planning considerations associated with a business sale, it is essential to prepare for all the financial ramifications. A truly efficient sale incorporates tax planning that can result in significant income, gift and estate tax savings—savings that may be lost once the deal is closed. That‘s why we work in tandem with your team of advisors to keep these goals front of mind and to pursue a successful close.

Access the valuable resources and expertise of UBS:

Estate planning
How is the business sale aligned with your personal estate planning goals? With the right strategy, your estate can have the maximum possible impact on your loved ones—now and for generations to come.

Tax planning strategies
How will your tax planning change as a result of the sale? Identifying the right strategy in consultation with your CPA or tax professional can make a significant difference in the proceeds you take home from the sale.

Philanthropy
How might the sale enable you to have a greater impact on the philanthropic causes that are meaningful to you and your family? Whatever legacy it is you want to leave, ensure it’s aligned with your overall financial goals.

Tailored lending
Does your sale structure require borrowing options to help you meet your liquidity needs? As you pursue your optimal overall investment strategy, we can leverage competitive rates provided by our global bank.

Family advisory
Do you have or desire to have family members involved in your business? We can help you orchestrate family business transition discussions and define your legacy objectives.

Broader wealth management strategies
Once the business has been sold, what's next? The right post-sale wealth management strategy can help you make a successful transition to the next phase of your wealth management journey with clarity and confidence.

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Flight paths: Selling a business is just the beginning

Gifting to charity before or after the sale of a business

We are one of the nation's leading ESOP advisors

700+
ESOP
transactions

$6+ billion
in total enterprise
value created

150+ years
of combined team
ESOP experience


Members and supporters of The ESOP Association and the
National Center for Employee Ownership

What is an ESOP?

An Employee Stock Ownership Plan, or ESOP, is both a qualified retirement plan for employees as well as a tax-efficient exit strategy for business owners. Owners of successful closely held businesses often use ESOPs to create a market in order to sell some or all of their shares to their employees and, if structured properly, the owner can defer or potentially eliminate the capital gain tax associated with the sale.

Read our comprehensive guide to Employee Stock Ownership Plans

General ESOP candidate profile

  • Business owner who desires partial or full liquidity
  • Company is a S-Corp, C-Corp or LLC, rather than a partnership or professional corporation
  • Company value of $10 million+ or EBITDA of $5 million+
  • Annual payroll of $5 million+ and 20+ full time employees
  • Company has additional capacity for debt
  • 5 year history of strong earnings and/or cash
  • Company has steady and controlled growth
  • Strong second in line management in place

Advantages of an ESOP

ESOPs can provide significant tax advantages while representing a mutual alignment of interests

What’s in it for the owners?

An ESOP transaction can:

  • Yield more in total after-tax proceeds to the owner compared to a sale to an outside buyer
  • Allow the owner to start the next chapter of their life while preserving their legacy and providing meaningful benefits to their employees
  • Provide the owner the ability to continue leading and controlling the company even after a sale
  • Preserve confidentiality unlike other liquidity alternatives that require the release of confidential information to prospective buyers
  • Provide an exit alternative to a third party sale or when there are a lack of interested buyers
  • Be structured as a series of transactions
  • Facilitate sales between shareholders
  • Accomplish many objectives of an estate and succession plan
What’s in it for the company?
  • Stock and/or cash contributions to the ESOP are tax-deductible
  • S-Corp ESOP companies may be eligible to operate federal, and in many cases, state income-tax free
  • Ability to acquire other companies in the future using pre-tax dollars
  • Potentially increased productivity and retention due to employees' “owner” mentality
What’s in it for the employees?
  • Rewards employees with tax-deferred retirement benefits
  • Employees receive equity in the company without having to invest any of their own cash
  • Participation can be combined with other benefit plans
What’s in it for management?
  • Gradual transition to “run” the company
  • Participation in the ESOP and possibly an executive non-qualified plan provides meaningful wealth building opportunities
  • Creates opportunities to motivate, retain and recruit key talent

What kinds of companies have ESOPs?

ESOPs are represented across a wide variety of industries, with a plurality of plans in services or manufacturing companies.