Who benefits from the sale of your company?
Monetizing your life’s work is the penultimate achievement of a CEO / Entrepreneur. Certainly, statistically, most companies will liquidate vs. sell for a multiple of earnings or revenue.
Let’s look at the shortlist of benefits to you:
- Unlocking trapped liquidity
- Less Stress or employee issues
- Lower liabilities
- More diversity in your net worth
- More Freedom / Time to pursue what you want to vs. having to
- Greater satisfaction of culmination/harvest vs. constantly in the grow-or-die mode
- Legacy fulfilled – many of us start with a goal – getting there is the reward.
- More significant opportunity for generosity/philanthropy
Your rewards have likely been many along the journey. You have shouldered much of the risk-reward continuum. Now it may be time to capture the prize. Be proud yet humble.
- Many of the above benefits are felt by your family. Your presence, happiness, less stress, and more quality time are immeasurable.
- Your kids learn a valuable lesson to follow their dreams and finish well!
- Generational wealth is often created in the sale of a middle market company, providing future generations with additional opportunities to invest in other businesses and further the family legacy.
- Beware, other less wealthy relatives may show a more keen interest in your advice!
You have likely created a valuable company and hired and nurtured a capable team. As a founder / CEO, we are often strong personalities and have driven the company to a particular stage. However, we often see that when founders and CEOs leave the business, the company usually takes on a new lifecycle of growth. New product development often increases, and previously thought-of constraints can melt away or be met with fresh eyes. Most sellers also acknowledge that several key members of their team have helped them get to where they are, be sure to reward those that helped get you here.
Like it or not, the IRS will typically be a part of your transaction. At the same time, the IRS affords private companies many deductions and privileges along the journey to encourage entrepreneurship in the USA; at sale, it’s often time to pay the piper. While the IRS benefits, I follow that acknowledgment that we are under no compulsion to pay a dime more than we have to. Investing in proper planning before you decide to sell will help you keep more of your proceeds. A lazy seller will invariably pay more tax. Give unto Caesar what is his, and no more. This is 100% controllable by you!
- There is no limit to the joy it can give a business owner in serving the community post-transaction or engaging in philanthropy with excess proceeds. In the little league field, church ministry, or just helping others in a scalable way, your sale benefits your community. Remember that you are an employer and contributor to other families within the community.
Many people get into business for themselves, guided by a deep desire to “do it better” or not work for “the man” any longer. Yet others, their craft evolved into a company, yet for others, the “business of business” was their profession and passion. However, as your business matured, you likely noticed the impact your business has on others, and acknowledging those stakeholders in the process is one key to having no regrets about your business.
|As CEO of Merit Investment Bank, Craig Dickens is a cutting-edge visionary and a lead banker and principal investor—responsible for charting the firm’s course, creating a dynamic culture of personalized service, and recruiting highly qualified professionals to serve Merit Investment Bank’s national and international clientele. Craig and Merit Investment Bank’s reach and access to world-class buyers and capital partners are imperative in serving all Merit Investment Bank clients in pursuing outlier outcomes.Craig has advised many leading companies and participates in and chairs several middle-market company boards. Known for being a trailblazer, he sets an example for the Merit Investment Bank team by being an enthusiastic deal marketer, rigorous client advocate, strong negotiator, and creative deal maker. Craig serves Merit Investment Bank’s clients by skillfully guiding them toward a strategic path to rapid growth, true business value creation and optimization, and exceptional liquidity events and exits.As a successful entrepreneur, certified M&A advisor, investment banker, and angel investor, he has participated in virtually every business dynamic from start-up to IPO, merger to acquisition. Craig also serves on the management committee for CDI Global, Merit Investment Bank’s sister organization, for cross-border Mergers & Acquisitions represented in over 30 countries globally. Merit Investment Bank is a leading boutique investment bank focused on entrepreneurial middle-market companies. Merit Investment Bank executes sell-side M&A, buy-side M&A, capital advisory services, debt and equity capital raises, corporate finance, and valuation, services.|