RareBrain Podcasts

Selling a business is usually a good-news, not-so-good news scenario. The good news for the business owner is that with careful planning they have just sold their company for maximum sale price. The downside is that if the business owner has not planned properly, they could face a massive tax bill. It is not unheard of for a business owner to wind up with less than half of the purchase price after taxes. Complicating the issue further is that what is good tax-wise for the seller is often bad for the buyer and vice versa. In this podcast Gower Idrees, CEO of RareBrain, offers suggestions on how to minimize taxes on a business sale.

Generally speaking, buyers prefer asset sales while sellers prefer stock sales. In an asset sale, the seller keeps possession of the legal entity and the buyer purchases individual assets of the company such as equipment, fixtures, and inventory. Asset sales are usually cash-free, debt-free transactions—they typically do not include cash and the seller normally retains the long-term debt obligations. With a stock sale, the buyer is purchasing the stock in the company and likely assumes responsibility for all of the business’ liabilities. In this podcast Gower Idrees, CEO of RareBrain, explains the reasons why buyers tend to prefer buying assets in a business sale as opposed to stock.

One of the more common mistakes business owners make is failing to optimize taxes before the sale of their companies happens. The result can be an unexpected, and often painfully large, tax liability. And don’t expect help from the buyer because savvy buyers will work to structure the transaction so that it is as beneficial as possible for them and their tax interests. Don’t wait until after you have agreed to a letter of intent. The key for business owners is to be prepared and proactive. In this podcast Gower Idrees, CEO of RareBrain, outlines what he considers the top tax considerations when selling your business.

There are a number of reasons buyers prefer asset sales when buying a business. In an asset sale, the seller keeps legal possession of the company while the buyer picks and chooses among the various company assets from equipment, fixtures, and inventory to clients lists and even good-will. Asset sales are typically cash-free, debt-free transactions—all of which is very beneficial to the buyer. However, structuring such a sale is not always so beneficial to the seller. In this podcast Gower Idrees, CEO of RareBrain, outlines the negative aspects of asset sales when selling your business.

It is critical for business owners to align their personal and family goals with their financial and business goals. That means business owners need to sync their financial planning with their exit strategy. It is not unusual for a business owner to have a significant majority of their net worth tied up in their company, which can lead to a variety of financial, legal, and legacy issues. In this podcast Gower Idrees, CEO of RareBrain, explains what some of those issues are and offers insight into how a business sale could materially, and potentially negatively, impact your current financial picture and future retirement plans.

A buyer will look long and hard at your team to determine if they are capable of advancing the company, so it is important for a business owner to ensure that their management team is held accountable for the successes and failures of their efforts. A stable well rounded management team connotes depth and strength and sustainability. Having just one or two critical managers could make the company vulnerable should they want to leave once the company comes up for sale or soon after your exit. In this podcast Gower Idrees, CEO of RareBrain, explains how key employees can undermine your company’s valuation and offers strategies that can help you prepare against key employee loss during your exit.

In family and closely held businesses, there are management gaps as company grows or the owner prepares to exit. Family business shareholders are often very leary of sharing company equity with outsiders. The situation becomes detrimental when the next generation isn’t prepared or willing to take over the reins, which can negatively impact the company and threaten its future. In this podcast Gower Idrees, CEO of RareBrain, explains the strategy of giving non-family key employees artificial, synthetic or phantom equity and how the strategy mirrors stock ownership without actually giving up equity in the family business.

No two business transition plans are exactly alike. But all transition plans need proper preparation and forethought to both secure the company’s future sustainability and to ensure that the transition will be seamlessly implemented. Many business owners do not realize that a transition plan is more than simply naming a replacement; it offers a roadmap for moving the company forward in such a way that protects its value and profitability. It also lays the foundation for growth and stability. In this episode Gower Idrees, CEO of RareBrain, offers suggestions that will help prepare you to do an honest assessment of your company and your transition plan and answer some tough questions.

A buy-sell agreement is a contract that outlines terms for the future sale of your business interest, whether the result of death, disability, or one of the owners opting to exit from the company. Buy-sell agreements are also sometimes called business continuation agreements and buyout agreements. Ideally, buy-sell agreements are fully funded in the event of death, and life insurance is frequently used for this purpose. The best time to do a buy-sell agreement is before you start your business and/or when you are the best of friends with your partners. In this podcast Gower Idrees, CEO of RareBrain, goes over key elements of a successful buy-sell agreement.

Family succession planning, better thought of as transition planning, is the most important thing you can do to help your company last through the generations but it is also the hardest challenge a business owner faces. Many put transition planning off because they are so consumed with running their company and keeping it successful. But if you only focus on today you will set your company up for future failure when it is time to relinquish control. Many successful businesses stumble and destroy wealth by not properly planning for intercompany transition. In this podcast Gower Idrees, CEO of RareBrain, discusses some of the transition issues you may encounter in family succession planning.