Wednesday, January 6, 2021

The Importance of Planning ahead for Closely Held Business Owners

Travis Hansberger guides Millstone Wealth Management in Minnesota as president and works with clients in tailoring investment portfolios to tax and financial planning objectives. Working closely with small business owners, Travis Hansberger emphasizes the importance of developing robust succession plans that ensure the seamless transfer of companies to the next generation. He also assists clients in situations where selling the business ultimately makes the most place.

With fewer than one-fifth of family businesses devising a well-planned and communicated succession plan, pitfalls abound. Relationships among family members can be complex and contentious, and not every business owner has a diligent and savvy relative or adult offspring capable of taking over the reins. In such situations, one strategy may be to reduce the paper value of the company, doing so in ways that ease the tax burden.

Alternatively, the business may find a willing buyer in partners, managerial employees, and outside parties. The key here is to work to bring the balance sheet to its maximum potential before the business is placed on the market. For those unable to find an active buyer who offers an attractive price, another option is to close the company and liquidate assets. In such situations, patience is the key, as monetizing the closely held business can be a protracted process. The bottom line is that it makes sense to find a qualified investment advisor with the knowledge to assist in drawing up the best possible succession plan.

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