Given
the heady merger and acquisition action happening, particularly in the
residential roofing contracting space, I thought a short, “Cliffs
Notes”-type article would be helpful for firm principals considering
their options. It is, by design, an at-a-glance information sheet; let’s
dive in.
Your Roofing Exit:
- You will exit your company, intentionally or unintentionally.
- Most owners have 75%-plus of their wealth tied up in their company.
- Traditionally, family, managers, or employees comprise the lion’s share of firm buyers when a principal exits.
- Since COVID, the marketplace has witnessed a significant increase in private equity interest.
-
Have
a plan that considers the following: the sale meets your company goals,
leaves a “positive” legacy, minimizes or eliminates tax liabilities,
and protects your financial future. - Exit opportunities
increase in value if your company is larger, has strong management with
depth, established operational systems, and a pattern of profitable
performance. - The exit plan summary: “How to cash out, eliminate taxes, and retire comfortably.”
The Options
Owners essentially have four sale options, each with a different value, tax obligation, and compromises.
Key Questions
You only have one chance to get the exit right.
- What are my personal, business, and financial goals?
- When do I want to retire independent of my business?
- How much money do I need for my business to retire?
- What is the value of my business (depending on the type of sale) and after-tax value? Is my company sale ready?
- How much money do I need from the “after-tax” sale to live independently from the business and into retirement?
- What are my various tax strategies to reduce and possibly eliminate taxes on internal and external sales?
-
Have I implemented a succession plan for the company to perform without my presence?
- Do I have tax savings investment strategies to pre-save for retirement and to make me less dependent on the sale price?
- Do I have asset protection plans to protect the company from predators and creditors?
The information provided is not intended to be legal, accounting, insurance, or tax advice. Beacon is a process consultant that provides written plans, consulting, and support programs to private owners for succession and exiting their businesses.