February, 2014
By Gary Pittsford, CFP®
President and CEO, Castle Wealth Advisors, LLC

Regardless of who is going to buy your business (a family member, key employee or someone else in the industry), the advisors that you choose to work with will be very important to the successful transition of your company. If Castle Wealth Advisors® is working with a client on a business succession plan, we always work closely with all of the advisors and sometimes we are asked to help find specialized accountants and attorneys to help in the process.

Most of your thoughts during the transition process will center around financial and retirement income security, tax planning for both you and your company, and the legal documents that are needed to define this transaction and protect you and your family in the future. The legal, tax, and financial decisions that you make will depend upon who the buyer is and the structure of the sale.

It is important to start picking your team of advisors three to five years before you intend to sell or transition the business. During those years leading up to the sale you want to spend some time each year with your advisors talking about planning ideas and what you can do to get the company ready for this important sale.


Tax planning is very important to every aspect of this pending transaction. You want to make sure that your accountant has been through this type of transaction many times before and knows all of the good options that are appropriate for the company’s tax return and for your personal tax return. If your accountant does not have a lot of experience in this area, continue to use him for your personal tax return but possibly he could recommend another accounting firm to bring in to help on this one transaction.


Legal documents will be very important because they will explain exactly what and how assets are being sold, what the buyer is bringing to the table and all of the terms that have been agreed to by the seller and the buyer. If you are selling the company to one of your children then there may be some promissory notes involved and stock gifting. If you are selling to someone else in the industry then a sale may be for all cash and the legal documents will outline in great detail the value of the assets for the new owner to start depreciating. If the sale is to a family member or key employee it will be important to have a Buy-Sell Agreement prepared in order to control the transition of the stock over several years.

It is common in these transactions to have not only a corporate attorney who is familiar with preparing all the corporate documents but also an estate planning attorney who can help with changes to Wills and Trust documents and help with the Buy-Sell Agreement.

Financial Advisor

It is important to have a financial advisor who can help you with decisions pertaining to assets that would be coming out of the company to you, and also the long term management of the sales proceeds and your retirement assets. During this process you will be moving from having a salary and corporate profits each year to having income generated by your sales proceeds and the personal investments that you have accumulated over the years. This is a big adjustment for most business owners and that is why planning is important two or three years before the sale.

Try to pick a financial advisor who has worked with many family business transitions and can work closely with your chosen attorneys and accountants. It is important that all of these advisors be able to talk to each other during the two or three years leading up to the sale.

The financial advisor that you pick will help you plan not only for the sales proceeds that you may receive but also help you make decisions about all of the personal assets, qualified retirement accounts such as IRA, income from your real estate holdings, and all other assets that may produce income for you and your spouse. It is important for you to keep the cost for managing all of your assets as low as possible and that is why you should pay your financial advisor management fees rather than commissions. Holding down your annual costs will be very important to your total income in the future.

Over the last 30 years your company has grown, your needs have changed, and tax laws have changed. Designing a smooth transition to the new buyer of your choice is not simple. In this transition, you want to minimize taxes and maximize the amount of cash that you receive from the sale. The best way to accomplish all of these goals is by having the best advisory team that you can find to help you start planning for this important transition three to five years ahead of time.

Gary Pittsford, CFP®, is President and CEO of Castle Wealth Advisors, LLC. Castle specializes in helping families and closely held business owners with valuations, succession planning, estate and income tax analysis and retirement income security. Castle’s senior partners work with clients throughout the country in making logical decisions that help them fulfill their personal and business financial goals. For more information visit www.Castle3.com, call 1-888-849-9559 or e-mail Gary directly at .