Entrepreneur, Jazz Musician. Elisa is an entrepreneur who co-founded a software firm. Elisa was in her early 60s and, much like her father before her, wasn’t ready to slow down and lived an active life between her business, three children and five grandchildren. Though she had planned well for retirement, much of her wealth was tied up in the business. Of even more contention, all but one of her children was successful in their own right and had little interest in the business. The third child had difficulty focusing and a somewhat troubled past.
One of her long-time employees, Peter, showed continued promise, was eager to learn, passionate about the business and seen as a leader to the employees. They’ve had initial conversations of a succession where Elisa would sell the business and the real estate to Peter.
We engaged Elisa to prepare for an eventual sale, understanding her complete personal financial situation, her ambitions, her fears and her passion. She wanted to sell the practice internally to keep the culture intact and avoid selling to a corporate buyer. Peter was eager and ready to transition, but was not financially prepared. He had little savings and minimal financial background.
We assembled a collaborative team of professionals, including business attorneys, estate attorneys, appraisers, business valuation specialists, CPAs and lenders. We served as the holistic advisors who had a view of the full picture that not only included the transaction, but also the personal financials and what was most important to Elisa and her family.
The team went to work providing essential services such as financial planning, budgeting, education and review of the valuation and forecasting, analysis of financing options, estate planning coordination and tax planning.
The result was that Elisa’s employee was ultimately able to acquire the business and the real estate. Post-sale, we provided investment management of the proceeds for Elisa, and benefits management, financial planning and tax planning for the new owner, Peter.
Elisa has retired and has a legacy plan in place for her family. Peter moved from having relatively no savings or excess cash flow to becoming an independent and successful owner with a fast-growing nest egg to better support his young, growing family.
This hypothetical example is for illustrative purposes and is not representative of any actual experience. Individual results will vary. It is presented only as an example and not intended as investment advice. Asset allocation and diversification do not guarantee a profit nor protect against a loss. There is no assurance that any investment strategy will be successful. Investing involves risk including the possible loss of principal. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.