The process of transferring a business to a family member is not an easy one. You need to start thinking about the possibilities years before you end up in a situation where you actually have to sell. This article will explore some of the variables that are key when considering how to turn your company over to someone else.
First, transferring your business to a family member can be considered a gift. This may result in reduced real estate taxes. Additionally, you may be able to maintain some control over the business even after your family member already owns it. This can be an important consideration for many business owners.
Seller financing is a common practice when it comes to buying and selling businesses in general. It’s even more common where transfers to relatives are concerned. With seller financing, you can implement a private annuity. This can provide a long-term stream of income for you. This could be a win-win situation for both you and your relative. You would receive regular payments over time, while your relative would be able to afford ownership of the business.
Keep in mind that a buy-sell agreement is still necessary. Even when dealing with the most trusted family members, legal agreements must be firmly in place. This contract clearly outlines all aspects of the arrangement. By putting a buy-sell agreement in place, everyone involved can rest assured that their interests is secure.
Working with Professionals
There are a number of important things to keep in mind when making this type of sale, so working with professionals is essential. Business brokers and M&A advisors understand the ins and outs of transferring businesses to relatives. They can help you navigate the process and make sure everything goes smoothly.