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Business founder-owners are often so focused on managing their businesses that they struggle to prepare for the eventual transition, both on the business front, as described here and in an article by Evercore Senior Managing Director Jason Sobol, and on the personal level. Assembling the right team can ease that burden, ensuring the best possible deal and opening up vistas in the next stage of life.

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Key members include:

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• Investment Banker or Business Broker: Depending on the size and complexity of the company, either an investment banker or business broker can help value the company, identify suitable prospective buyers, structure the deal, and negotiate and advocate on behalf of the business founder-owner.
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• Wealth Advisory Team: A holistic approach to a business transaction includes a team of wealth advisors who will work closely with the founder-owner’s other trusted advisors and will, as appropriate, engage and educate the entire family, advocating for and representing their personal planning goals and objectives. This team leads financial and estate planning strategies to meet long-term lifestyle, family, philanthropic and future business goals, supported by an asset allocation and investment plan tailored to the long-term objectives. Personal planning should be considered as early as possible in advance of a transaction.
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• Specialized Attorneys: A well-managed transaction is likely to include both a corporate attorney and an estate attorney. The corporate attorney represents the business being sold and will review information disclosures to investors, opine on the various potential structures of a transaction, negotiate and draft confidentiality, employment, and purchase and sale agreements, and orchestrate the closing of the deal. An estate attorney represents the founder-owner and his or her family, to ensure a properly positioned estate plan, as well as tax-efficient wealth transfer strategies pre- and post-transaction, as appropriate.
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• Accountants or Tax Advisors: At least one and possibly multiple accountants or tax specialists, depending on the complexity of the deal, will play an important role on the team. Simultaneously, a founder-owner could have his or her personal CPA help coordinate advanced planning strategies for wealth transfer, charitable giving, or other tax-efficient planning pre- and post-deal.
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• Extended Team: A business valuation specialist, life insurance professional, or an exit-planning specialist may also have valuable roles to play in managing a successful business transition. Evercore Wealth Management works closely with business founder-owners and their other advisors, providing comprehensive pre- and post-transaction planning.

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It’s All in the Details: A Checklist for Founder-Owners

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Pre-transaction
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• Engage in a comprehensive family wealth and business assessment to clarify and develop a goals-based wealth plan.
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• Identify and implement tax-efficient wealth transfer strategies to transition assets with potential for growth to future generations.
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• Review current and future liquidity needs to ensure lifestyle sustainability, including replacing income previously derived from the business and offsetting expenses previously charged to the business.
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• Structure and minimize income, gift and estate taxes related to the transaction, factoring in domicile, residency and trust situs considerations.
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• Consider individual and family philanthropic goals while taking advantage of charitable planning strategies and available tax deductions.
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• Consider asset location with respect to investment strategies across family entities (i.e., trusts).

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Post-transaction
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• Develop post-transaction equity diversification strategies while remaining mindful of securities laws relating to restrictions on selling, hedging and borrowing of restricted stock.
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• Engage in the management of more diversified liquid and illiquid assets, as well as any retained concentrated holdings.
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• Review cash flow, to ensure that income from the business and ongoing expenses previously charged to the business are sufficiently replaced.
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• Supplement existing knowledge with family governance and private wealth education.

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Ashley Ferriello is a Partner and Wealth & Fiduciary Advisor at Evercore Wealth Management and Evercore Trust Company. She can be contacted at ferriello@evercore.com.