Business Transfers M&A « CenterPoint Business Advisors

Michael F. Coyle Earns Certifiied Exit Planning (CExP™) Designation

February 23, 2012 at 3:54 pm | Posted in Building Business Value, Business News & Topics, Business Strategy & Growth, Business Transfers M&A, Exit Planning & Transition Strategies, Family Business Topics | Leave a comment

Michael F. Coyle Earns Certifiied Exit Planning (CExP™) Designation

Franconia, NH 2/23/2012: Michael F. Coyle, CBI, CExP™, member of The BEI Network of Exit Planning Professionals™, recently earned the designation of a BEI Certified Exit Planner (CExP™). The BEI CExP™ designation is the standard for Exit Planning certification. Through training, rigorous testing and in-depth Exit Plan Creation coursework, Michael has advanced is expertise in providing comprehensive, professionally executed Exit Planning services to owners of privately held businesses.

“Exit Planning Professionals who successfully complete the BEI Certified Exit Planner program have come to be known as premiere Exit Planning Professionals because their in-depth knowledge and demonstrated application of The BEI Seven Step Exit Planning Process™ perfectly positions them to counsel business owners and their advisors on a wide array of business issues ranging from building value within a business to identifying exit objectives, addressing key employee incentive planning and retention issues, incorporating business continuity planning, and establishing wealth preservation,” said John Brown, President of Business Enterprise Institute.

“This is another example of the ongoing personal and professional dedication CenterPoint Business Advisors brings to our business clients,” said Michael Coyle. “We continually strive to increase our ability to serve our clients by achieving the highest professional and education standards in each of our service areas.”

The business owner community benefits from engaging an Exit Planning Professional who holds the BEI CExP™ designation by having greater confidence that the service they receive is professional in quality, adheres to ethical and industry standards of practice, and meets a level of expertise BEI deems credible and worthy of one of its certified members.

CenterPoint Business Advisors was formed in 2004 to assist business owners throughout New England in planning for and executing a successful exit from their businesses. CenterPoint offers a suite of professional services including; Comprehensive Exit Planning; Business Valuation & Appraisal; Value Building Consulting; Business Intermediary services.

For more information, or to contact CenterPoint Business Advisors, call 888-988-0999 ext. 101 or, go to www.cpointadvisors.com,

How important is your business value in meeting your retirement needs?

July 1, 2010 at 5:33 pm | Posted in Building Business Value, Business Acquisitions, Business Strategy & Growth, Business Transfers M&A, Exit Planning & Transition Strategies | Leave a comment
Tags: business valuation, exit planning, growing business value, mergers and acquisition s, retirement planning, small business ownership

Michael F. Coyle, CBI

Exit Planning Advisor

I read an article the other day indicating that only 9% of all current retirees had more than $500,000 in investments to support their retirement needs and only 34% had more than $100,000. This is pretty grim given that a woman 65 today has a life expectancy of 84 and a man 79. Also, rising tax rates, energy costs and medical bills can consume the majority of a retirees income. Who knows what will happen to Social Security it but it seems that many people are counting it to be their primary source of retirement income.

I have worked with hundreds of small business owners in assisting them in preparing for and executing an exit from their business. It is common to see that their business value can represent up to 75-80% of their entire net worth. These business owners failed to diversify their wealth during their years of business ownership. Many reinvested in their businesses or fueled their lifestyles with the cash flow from their businesses.

I have also experienced that very few business owners have a true understanding of the value of their business, or what drives and detracts from its value. This is perplexing given that their business value is often the largest element of their net worth and this business value is very fragile, illiquid, and subject to wide swings during times of economic change.

My advice to small business owners include:

Think of your business as a wealth generating engine and not just a professional activity. Understand what creates value in your business and know how to preserve and grow its value
Understand that value is in the eye of the beholder and what you “think” your business is worth and what a typical buyer thinks it is worth can be very different
Have a qualified 3rd party formally value your business at least every 2-3 years and have a plan to grow it value
Eliminate the waste in your business and use this cash to diversify your wealth. You can do this by buying real estate (maybe your business real estate), creating an aggressive qualified retirement program, and/or personally investing income from excess cash flow
Develop an exit strategy for your business and keep your eye on this prize. When you sell or transfer your business this is usually the biggest payday you will ever experience. You should have an exit strategy when you start the business and you should make this into a formal exit plan within 5-7 years of your planned exit
You can never start too early in preparing for your exit and in maximizing your after tax cash from your exit
Develop a personal plan for after you exit your business. This includes both an investment plan and also a life plan that will make you (and those around you) happy and productive in retirement
Use professional advisors to assist you in understanding, maximizing, and realizing the full value of your business. The modest fees you will pay should give you a many-fold return upon exiting your business

Updating Buy-Sell Agreements and Business Valuations

June 17, 2010 at 6:26 pm | Posted in Building Business Value, Business News & Topics, Business Strategy & Growth, Business Transfers M&A, Exit Planning & Transition Strategies | Leave a comment
Tags: Business Exit Planning, business valuation, buy-sell agreements, CenterPoint Business Advisors, Exit Planning & Transition Strategies, Small Business Owners, Value Building

I met the other day with a Business Risk Advisor and we were discussing exit planning for business owners. Our conversation evolved toward discussing risk management and business continuity during the exit planning process. We talked about various insurance strategies to protect business assets and personal ownership interests. However, I told him from my perspective the greatest risk factor for any business with more than one owner is the lack of an up-to-date buy-sell/shareholder agreement. The probability that there will be an ownership dispute or some type of triggering event is quite large for most businesses.

Often what is at stake is the survival of the business itself. If the business fails due to a poor buy-sell agreement, suddenly the value of the business equals the auction value of the assets and nobody is happy. Most business owners I have encountered have some type of buy-sell agreement drafted, but have not looked at it in years. Most often it has not been reviewed since they started the company. The outdated agreements usually have either some understated value of the business or a loosely defined formula or process for valuation if a triggering event occurs.

CenterPoint recommends that all business with shared ownership review their buy-sell/shareholder agreements annually with their business attorney and other advisors.

These agreements can contain complex and sometimes emotional topics, but the best time to discuss these is before there is an event or dispute.

The agreement should cover each triggering event (death, disability, sale to anoutside party, termination of employment, planned or voluntary retirement, and shareholder dispute)

1. You should decide:

a. Does the departing shareholder have a right or obligation to sell… and to whom?

b. Does the remaining shareholder and/or company have a right or obligation to purchase… and how?

2. How will the ownership interest in question be valued?
3. How the acquisition be funded?
4. What are the terms and conditions of any acquisition?

Often neglected is the process of revaluing the business. We recommend that the value be agreed upon annually and noted in the corporate records. The complexity of the valuation will be determined by the size of the company, the number of owners, and the likely parties that may evaluate the valuation (courts, IRS).

In summary, one of the largest and perhaps easiest risks for business owners to mitigate is to have an up-to-date buy-sell agreement and business valuation. Failing to do this could put all the business value at risk. If you are an advisor to business owners suggest that they address this area of risk.

2011 Federal Tax Increases: Does Selling Your Business in 2010 Make More Sense?

January 13, 2010 at 7:30 pm | Posted in Business Acquisitions, Business Transfers M&A | Leave a comment
Tags: business sales, business transfer, capital gains, income tax rate, selling a business, tax strategy

Are you one of the numerous business owners who want to sell their business but are thinking they should operate one more year? Maybe you are hoping to bring revenue and profits back to prior levels?

Here is one thing to consider as you make a decision about selling: The government might tax away any net increase you may obtain in the selling price.

Since 2003, the top tax rate on most long-term capital gains has been 15% for most people. The current capital gain rates are scheduled to expire effective December 31, 2010. Then, starting in 2011, the top 15% rate is scheduled to revert to its former pre-May 6, 2003 level of 20%.

The big question now is: Will the top rate only rise to 20% or will Congress raise it higher? The recent historical Capital Gains rates are as follows:

Pre 1978: 35%

1978: 28%

1981: 20%

1987: 28%

1997: 20%

2003: 15%

Discussions on Capitol Hill range from extending the 15% sunset, to raising the rate above the 20%. Only time will tell. However, if no alternative proposal is voted into law, the rate will automatically adjust to the 20%.

Also it is important to keep in mind that with the pending Health Care Reform, people classified as wealthy will experience an additional tax levy or surtax. There are various proposals that could raise taxes on those earning over $250,000 by 0.5%, increasing to 5.4% on incomes over $1M.

And finally, regular Income Taxes are slated to increase. That’s right, in Year 2011, along with an increase in capital gain rates, the top federal tax rate returns from 35% to 39.6%.

The sale of a business typically causes the seller to incur both capital gains and regular income taxes on the sale proceeds. With both of these scheduled to increase in 2011, it makes sense to seriously consider selling now. If an entrepreneur wants to experience the lowest tax impact possible from selling his / her business, selling before the tax rates increase is the way to go.

CenterPoint is available to work with business owners and their accountants to individually analyze the tax savings of selling now versus selling in 2011.