The vast majority of the personal wealth of most business owners is the value of their business. Getting access to that trapped wealth in the owner’s business is a principal goal of a successful access plan. Business owners without an exit plan may never realize the potential value of their…
Business owners that fail to plan for their lives after exiting their business often report ‘seller’s remorse’ and dissatisfaction with their lives. Understanding and planning for the personal after exiting a business focuses on two-part personal question: who we are outside of our business and what are our personal goals.…
Using keyman insurance to fund equity redemptions is likely to increase estate tax liability. US Supreme Court holds that keyman insurance proceeds of company-owned policies are an asset of the company, regardless of a contractual obligation to fund an equity redemption. Cross-purchase agreements funded by insurance should avoid these estate…
Valuing a business on an ongoing basis is intended to avoid valuation disputes in litigation and provide fairness and predictability. Courts enforce contractual language that establish the the value of a closely held business based on valuation reports conducted by the owners for non-litigation purposes. Courts are likely to view…
The benefits of exit planning and succession planning are more than improving the prospects for a future sale at a good price. Closely held business owners that implement the Value Acceleration Methodology can expect to improve profits now and to free up more of their own time. Succession and exit…
When one partner fails to respond to a notice of breach from the other partner, the relationship may be so damaged that dissolution is required. Courts may apply the ‘not reasonably practicable’ standard in determining whether a business can continue in its present form. The ‘not reasonably practicable standard’ is…
Exit planning describes the process of preparing a closely held business for the exit of its owners at its maximum value. It is the preparation and implementation of a plan that maximizes the current and future value of the business. Exit planners help owners understand the true value of their…
Arbitration agreements survive the termination of an underlying contract, unless the parties specifically terminate the arbitrate provision. In disputes involving closely held businesses, the arbitration agreement may be invoked even if the business is no longer in existence. Unless there is a specific agreement on the question of ‘arbitrability’ of…
The application of a control premium more than doubled the claimed value of a business purchased its employees through and ESOP An investment banking firm involved in the transaction is subject to claims that it was biased because the fee it earned was contingent on the purchase price. The valuation…
An arbitration clause in a is unlikely to be enforceable against a beneficiary unless there was to consent to arbitrate; it is unlikely to be inferred from the will alone. An arbitration clause imposed as a condition of accepting the benefit of a trust is more likely to be enforced…