Small Business and Retirement issues

[jetpack]

The WSJ has a good article on the issues specific to small business owners and retirement.

http://online.wsj.com/articles/prep...1406640922?mod=WSJ_hps_sections_smallbusiness

I've certainly has issues with valuing my business for a possible sale.

I know a lot of early retirees are business owners, what issues have you had with wrapping up the bussiness?

 

[Ronstar]

I was only a part owner. Sold my share to coworkers and the company. Company is still in operation. My biggest issues were:

1. Getting coworkers/company to buy my stock
2. Getting someone trained to replace me
3. Getting my clients comfortable with my replacement

 

[someguy]

The article appears to be behind a paywall. I am also interested in valuing my small business. I do not/have not included any valuation of it in my NW, but think that it should be included in some way. Even a fairly conservative multiplier of cash flow would be a large boost.

 

[SoClose]

Can't read the article, but here's what I'm experiencing

Owners converted the company to an ESOP 15 years ago. The company was valued, then the owners sold their stock to the ESOP over the 15 years. Company is now 100% owned by the ESOP.

The company has struggled without their leadership, and the few of us remaining are trying to find a buyer for the company assets to cash out and terminate.

The ESOP is a very complicated beast and an independent profession valuation is prepared every year. There are many companys that are in the business to provide company valuations. There are three main comparisons used to arrive at the value. Income-Discounted cashflow, Market, and Asset base.

So Ronstar lists the hurdles. The major one is finding competent people to replace the owner

 

[jetpack]

Oh, Sorry about the paywall, they were giving out free WSJ subscriptions somewhere, I should have posted that here.

Anyway to summarize the problems:
- Owners overvalue there business for sale
- Older clients, clients that would leave if owner left, etc.
- Need to groom successor
- Many personal expenses were covered by business, phone / car / etc,
and they didn't take those expenses into consideration.
(one person had a $100k of personal expenses handled by business,
which really sounds a bit fishy.)
- SEP vs 401k depending on income.