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Maximizing financial benefit with the sale of a business

For many New Jersey business owners, there comes a time when they would like to move forward with a business sale and move on to something else. Whether that is retirement or starting another business varies depending on their motivation. One of the key factors to having the ability to do what they want is maximizing the return on the business sale. To do this, there are certain strategies that a business owner must remember at the time of sale.

There are three basic strategies that the owner should use when they sell. They include the presale corporate planning, negotiating in a skillful manner and wealth management. The company's valuations must be current and the financial statements should adequately express the company's present and future value. Often, a business owner who is looking to get out will make the mistake of expressing that to the prospective buyer and place themselves in a poor negotiating position. Being savvy about the negotiation can boost its effectiveness and the sale price.

Once the business is sold, the wealth that was accumulated from the sale needs to be addressed in such a way that the family will get as much as possible after taxes. The company itself and the tax circumstances will yield openings to mitigate how much is paid to the government. For example, it is possible to "freeze" a business's value. What this means is that when a trust is put in place, any appreciation will not be viewed as part of the business owner's estate. That can avoid heftier tax bills than there might be otherwise.

For a business owner who is selling, these exit strategies can seem overwhelming, even to someone who is an entrepreneur and has built a successful business. These are three broad-based ideas of what to consider with the sale of a business. For in-depth information and guidance on how best to maximize profit and adhere to the law with business sales, a lawyer can be of assistance.

Source: Forbes, "How Successful Entrepreneurs Maximize Personal Wealth Selling Their Companies," Russ Alan Prince, Oct. 25, 2017

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