Selling Your Business: The Transition from Entrepreneur to Investor

354 Pages·2004·1.143 MB·English

by  Louis P. Crosier

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SELLING YOUR BUSINESS
The Transition from
Entrepreneur to Investor
Edited by Louis P. Crosier
John Wiley & Sons, Inc.
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Praise for
Selling Your Business
I found this book to be provocative and informative. Louis Crosier lends
expertise on complex topics in a non-threating way that allows us all to be
more productive as legal, tax and investment advisors. We believe that the
moreour clients understand the complexity of wealth management,
the better we can assist them in meeting their needs.
—Leslie White Allen, President
Family Wealth Management Services
An excellent handbook for corporate insiders or anyone whose wealth
is concentrated in a single company. Read this before you sell a share.
Well done!
—David Southwell, Chief Financial Officer
Sepracor, Inc. (SEPR)
Founding and making a company grow is fun. Trying to invest the money
you make selling a company is not always fun, and this book will help you
avoid making the same mistakes that many have made who came before
you. Beware of your new-found friends! If you are considering selling your
business or have recently done so, read this book.
—William James, Founding Partner
Rockport Capital Partners
An important resource for anyone running a family office. I have used this
book to bring family members up to speed on multiple topics related to
managing family wealth.
—Russell F. Shappy, Jr., Treasurer
Berwind LLC
This book is right on target. If you are a family business owner considering
selling a portion or all of your company, I recommend this book to you
highly. In my 18 years of acquiring and investing in family-owned companies
I have never come across a better resource than this book for helping the
business owner on personal financial issues. It will help you effectively shift
focus from running your business to harvesting your life’s work.
—Peter Z. Hermann, Founding Partner
Heritage Partners
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SELLING YOUR BUSINESS
The Transition from
Entrepreneur to Investor
Edited by Louis P. Crosier
John Wiley & Sons, Inc.
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Copyright © 2004 by Wealth Management Services, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
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preparing this book, they make no representations or warranties with respect to the accuracy or com-
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ISBN 0-471-48623-X
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
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For Hope, Catherine, and Wilder,
with all my love.
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Contents
Foreword xv
Edward I. Rudman, Co-Founder and Chairman, Pell Rudman,
now Atlantic Trust Pell Rudman
Introduction xix
Louis P. Crosier
Part I
Before Selling Your Business 1
Chapter 1
Pre-IPO/Presale Planning 3
William R. Fleming, Director; and Daniel Carbonneau, Senior Manager;
with Richard L. Kohan, Partner, PricewaterhouseCoopers
Setting the Stage 3
Choosing a Business Structure 4
Building a Professional Service Team 10
Obtaining Financing 16
Sharing Ownership with Employees 18
Company Benefits and Policies 23
Conclusion 28
vii
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• viii • CONTENTS
Chapter 2
Trust and Estate Basics 29
A. Silvana Giner, Senior Partner; and Kimberly Cohen, Junior Partner,
Hale & Dorr
Basic Wealth Transfer Tools 31
Presale and Pre-IPO Planning 33
Complex Wealth Transfer and Estate Planning Issues 37
Summary 43
Chapter 3
Life Insurance: From the Basics to the Advanced 45
Herbert K. Daroff, J.D., CFP®, Baystate Financial Services
Permanent Insurance 46
Term Insurance 46
What Product Is Best? 46
Buying Term and Investing the Difference,
but in a Tax-Advantaged Manner 47
How Your Money Gets Invested 47
Expenses 49
Assessing Cash Value During Lifetime 50
Selecting the Right Premium Amount 50
Selecting the Right Premium Payer 51
Who Should Own the Insurance? 52
Who Should Be Insured? 53
Conclusion 53
Chapter 4
Negotiating the Deal 55
F. George Davitt, Partner, Testa, Hurwitz & Thibeault;
and Barry Nalebuff, Ph.D., Milton Steinbach Professor of Management,
Yale University School of Management
Sell Your Company Right 55
An Open Selling Process 56
A Closed Selling Process 56
Paying Bidders to Play 57
Right of First Refusal 58
Right of First Offer 58
An Offer You Can’t Refuse 58
Professional Help 59
Earn-Outs 59