Preparing for a Business Transition

Determining value is a central question for a business owner considering the sale or transition of the business. A key element that drives company value is earnings. However, Todd Craft and Tim Muehler, both with Clifton, Larson, Allen, LP, note that the quality of the earnings is the key. A prudent buyer is going to look behind the numbers and determine how the earnings are being generated. Muehler says quality earnings are:

  1. Operational in nature and easily replicated by a buyer;
  2. Diversified and thus less susceptible to risk; and
  3. Capable of significant growth.

Today, most mature, closely-held businesses are owned by Baby Boomers, which means that many will transition over the next few years. The businesses will be sold to key insiders, outside third parties or transferred to family members. In any case, necessary planning must take place in order to insure a smooth and successful transition.

The planning process typically involves more than just the business owner. Instead, the business owner will assemble a team of advisors to assist. Potential team members for consideration include:

  1. Attorney
  2. CPA
  3. Qualified Business Valuator
  4. Banker
  5. Trust Officer
  6. Insurance Professional

Some of the team members may wear more than one hat. However, each brings a different perspective and talent to the planning process.

The steps for developing any given business transition plan may vary but there are a number of common steps. A range of values should be established for the business. Existing corporate or limited liability record books, along with estate and succession planning documents, should be reviewed.

A family meeting should be held to determine goals, interests, feelings about other family members, and the roles of family members in the business. Various family goals should be discussed which may include: (a) retaining control by the existing owner; (b) retaining income to continue the lifestyle of the owner and his or her family; (c) satisfying the family’s estate planning objectives; (d) providing for continuity of the business; and (e) reducing transfer and income taxes along with administration expenses.

Various exit strategies need to be reviewed such as asset sale, stock sale, sale to ESOP, sale to employee, sale to family member(s), sale to grantor trusts, lifetime gifts to family members, gift or sale to family members at death. Consideration must be given to the cash needs of the business during the implementation of any plan. The plan, once in place, is typically implemented over time. Thus, it should be reviewed and tweaked periodically.

All of the above takes time, first planning to determine goals, then action steps to reach the goals. It is not unusual to have the entire process take one to three years. There is no time like the present to start.

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Affordable Care Act Deadline for All Employers is October 1

As most people are aware, portions of the Affordable Care Act (“ACA”), which is also known as “Obamacare”, are coming into effect over the next couple years. There is a deadline approaching which applies to all employers, including cities, villages, and towns. No later than October 1, 2013, all employers must send a “Notice to Employees of Coverage Options.” This notice must be sent to all employees, full-time and part-time. While many portions of the ACA may not apply to small cities, villages and towns (those with fewer than 50 employees), the October 1 deadline applies to all employers, big and small.

The United States Department of Labor has produced two sample notices which are available here. One is for employers who do not offer a health insurance plan; the other is for employers who do. The sample notices contain a page of general information, and a page which the employer should fill out prior to delivering the notice to employees. There is also quite a bit of general information regarding the ACA on that website. In addition, the Towns Association has published guidance on its website, and the League of Wisconsin Municipalities has also published an article on the ACA in the September edition of the Municipality.

Terry Dunst will be providing additional information about the Affordable Care Act and its impact on municipalities at our upcoming Municipal Seminar on October 3, 2013. You can register here or by calling our office at 715-246-3800 or 715-235-9016.

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2013 Municipal Seminar

Bakke Norman hosted its Municipal Seminar on Thursday, October 3, 2013, at the WITC-New Richmond Campus.

Seminar sessions included:

These video presentations, and others, are available on Bakke Norman’s YouTube channel at: Enjoy the 2013 Municipal Law Seminar videos below.

Ethics – Kevin Kennedy, Wisconsin Government Accountability Board

Economic Development – Tom Schumacher, Bakke Norman Law Offices

Grievance Policies – Pete Reinhardt, Bakke Norman Law Offices

Affordable Care Act – Terry Dunst, Bakke Norman Law Offices

Open Meetings/Closed Session – Lee Turonie,Wisconsin Towns Association

Implements of Husbandry and Town and State Roads

Last night, Bakke Norman attorney Tim O’Brien attended one of six town hall meetings being held by the Implements of Husbandry Study Group. The Study Group is being led by the Wisconsin Department of Transportation (DOT) in partnership with the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). There are representatives from numerous agriculture groups, associations and businesses, the Wisconsin Towns and Wisconsin County Highway Associations, the UW Center for Agricultural Safety and Health, UW-Madison Department of Biological Systems Engineering and UW-Extension. The purpose of the Study Group is “to explore options that would restore the balance that supports Wisconsin’s vital and diverse agricultural industry, while at the same time preserving the public’s investment in state and local roads and bridges and provide safe travels for all users.”

Approximately 100 people were in attendance at the meeting in Chippewa Falls. If the first four meetings were similar to last night’s, it is fair to say the Study Group has been engaged in spirited discussion! Over 70% of the attendees were farmers or elected officials. Other attendees included equipment dealers, agricultural industry and trade group representatives, interested citizens and local state legislators. Representatives from the DOT, DATCP, Wisconsin Towns Association, Wisconsin Farm Bureau and the State Patrol led the meeting. They presented the preliminary recommendations the Study Group was proposing to send to the legislature, but acknowledged the input that had been received at the first four meetings had already led them to consider changes to the recommendations.

Included here are links to three documents. The first is the overview of the preliminary recommendations of the Study Group. It includes the Study Group’s proposed changes to current Implements of Husbandry law, a comparison of the current law and the Study Group’s proposed changes, and a Proposed Implements of Husbandry Weight Table. It is important to emphasize these recommendations are not yet finalized. There was considerable debate at the meeting about whether the proposals adequately address the reality of today’s farm implements and vehicles, whether the DOT or local government officials should be responsible for granting any exemptions, and how the proposed changes would affect other industries, such as logging and frac sand mining. That is why your immediate input on these issues is important.

The Study Group intends to finalize its recommendations in the next few weeks, with the goal being to draft legislation to be introduced in the State Senate and Assembly during the upcoming fall session. There is less than one week remaining to provide additional information to the Study Group. Linked here are two surveys. The first is directed to farmers, including those who provide custom operator services. The second is directed to local elected officials and citizens. Please take a moment to complete the survey and return it by email to You can send any comments to the same email address. You may also send your completed survey by mail to: IoH Study Group Survey, Wisconsin Department of Transportation, 4802 Sheboygan Avenue, Room 451, P.O. Box 7965, Madison, WI 53707-7965.

For further information about this issue, visit A print-friendly version of this article and linked documents can be found here.