At the young age of 26, Bill took over his father’s HVAC business and has since grown it into one of the most respected in the Greater Lakes region. Cherry, meanwhile, has been a supportive partner, helping out with the business over the years, but her primary focus has been raising their three boys. Most of their wealth is tied to the business, but they have been smart with their savings, setting aside $500,000 at the bank and maintaining modest 401(k) balances.
Recently, Bill was approached with a business offer from Private Equity, but after 29 years of building and growing the company, he’s not sure if selling is the right choice. What’s more, if they do decide to sell, they’re not certain about the tax implications, how to structure the sale, or what they need to net after taxes to fully retire. They also feel overwhelmed by the idea of figuring out how to replace their income from the sale. They have a strong sense of responsibility to their employees and want to ensure they are taken care of if they choose to exit the business.
Bill and Cherry found a solution by meeting with a wealth advisor here at Cetera Planning Partners. Together, they explored several possible sale structures, weighing the pros and cons of each one. They considered a structured sale over time and an upfront lump sum payment. We also brought in a CPA to discuss the different tax consequences of each strategy.
After evaluating their options, they decided on a plan that would allow Bill to gradually transition out of the business while ensuring a smooth transition for their employees. This plan involved taking 90% of the business in a lump sum payment, with the remaining 10% structured over the next three years.
With the help of their wealth advisor, Bill, and Cherry also implemented investment recommendations to replace their income once they’ve fully transitioned away from the family business. They now feel confident in their decision, knowing they’ve found a solution that works for them and their employees.
