facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
3 Steps to Prepare You for the Sale of  Your Business Thumbnail

3 Steps to Prepare You for the Sale of Your Business

By Joseph Belfatto

The dream for many entrepreneurs is to start a business, grow it, and then sell it for top dollar before moving on to the next chapter of their lives. The key to making all this come true successfully is to be clear on what it is you want to accomplish and to plan accordingly. 

First, consider what your goals are. Are you selling your business to have a cushy retirement and spend time with family? Are you going to use the capital to start another company? Or do you envision getting involved with a charity of your choice? It is important to consider what it is that you want leading up to and following the sale of your business. Preparing for the sale of a business can be a dizzying experience, but there are strategies that you can implement to stay organized throughout the process and ensure that you achieve the most beneficial financial outcome. 

Income Tax Planning

When looking at the income tax implications of the sale of your business, consider that your AGI[1] (Adjusted Gross Income) is the highest it will ever be. This basically means that if you do not take the proper steps, you could end up paying more taxes than you need to. First, consider the capital losses in your current portfolio. By realizing those losses, you can net them against your gains on your tax return, effectively lowering the amount you owe income tax on. 

Next, if you are charitably inclined, you may consider making a charitable donation which will lower your tax burden. One of the strategies we often employ is to establish a Donor-Advised Fund[2] (DAF) and place some of the proceeds of the sale into that account. A donor-advised fund is a charitable giving account designed exclusively to invest, grow, and give assets to charities for meaningful and lasting impact. Here's how it works: your contribution into the DAF is tax-deductible in the year you fund the account. From there the assets in the DAF account grow tax-free. When you’re ready, you can make distributions from the account to qualified nonprofit organizations at your leisure for the remainder of your lifetime. 

Another option to consider is making an investment in an opportunity zone[3]. Investing in an opportunity zone fund can potentially be a meaningful avenue to realize large pools of capital gains while both deferring and reducing the resultant tax bill. Additionally, investors can roll their profits into long-term investment opportunities where potential gains would be tax-free. To learn more about investing in opportunity zones, check out our White Paper Making Good Become Great: Investing in Opportunity Zones.  

Estate Planning

Putting shares of your company in a trust or other entity can save you substantially on estate taxes but be advised that this should be done before any Letters of Intent (LOIs) come in from any potential buyers. The estate planning process should be completed before any third party starts talking about the valuation of your company. The reason why this is advised is because the value of your company will most likely increase as the sale process begins.

To start the process, an estate and tax attorney would need to set up your wills, appoint guardians and trustees, and complete the legal filings. If you find that the value of your estate exceeds the lifetime limit, then it may be time to consider lifetime exemptions to get assets out of your estate through dynasty trusts, GRATs[4] (Grantor Retained Annuity Trusts), FLPs[5] (Family Limited Partnerships), and contributions to private foundations. 

Completing your estate planning will not only benefit your business, but it will benefit your family should anything unexpected happen to you. If you do not have a trust and estates attorney, your Simon Quick advisor can connect you with a qualified professional. 

Retirement Planning

Since the sale of your business will likely result in the largest windfall you will ever receive during your lifetime, it’s important to put some of the proceeds away for your retirement. When investing for retirement, you should aim to maintain your current lifestyle and support your other aspirations (such as supporting a charity or passing on wealth to future generations). Remember to consider when you want to retire, how liquid you need your funds to be, as well as the volatility of the market (i.e., how much risk you want to take on when investing close to your retirement). 

These important considerations must be taken into account when planning for the sale of your business and planning for retirement. Make sure you check in with your financial advisor in order to take the proper steps. 

How We Can Help

As you can see, there is a lot to consider when planning for the sale of your business. There is no reason to go through this alone; a trusted financial advisor can help you figure out which options are best for you and your family. At Simon Quick we would be more than happy to guide you through this process. Please call us at 973-525-1000 or email Info@simonquickadvisors.com to set up a consultation. 


Simon Quick Advisors, LLC (Simon Quick) is an SEC registered investment adviser with a principal place of business in Morristown, NJ. Simon Quick may only transact business in states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. A copy of our written disclosure brochure discussing our advisory services and fees is available upon request. References to Simon Quick as being "registered" does not imply a certain level of education or expertise. No information provided shall constitute, or be construed as, an offer to sell or a solicitation of an offer to acquire any security, investment product or service, nor shall any such security, product or service be offered or sold in any jurisdiction where such an offer or solicitation is prohibited by law or registration. Additionally, no information provided in this report is intended to constitute legal, tax, accounting, securities, or investment advice nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. It should not be assumed that future performance of any specific investment or investment strategy will be profitable, equal any corresponding indicated performance level(s), be suitable for your portfolio or individual situation, or prove successful.