I usually begin my talks at NAMM or sharing groups with three questions:
1-How many of you are relying, on the proceeds of your business to help fund, at least in part, your retirement?
Half the hands go up. I jokingly say, for those that have not raised their hands, you either have a rich spouse, are expecting an inheritance, or plan on selling real estate, because we both know you can’t live on social security alone.
2- How many of you know how much monthly cash flow you’ll need from your business or other sources to support your personal retirement? Fewer hands go up.
3-And how many of you know how you’re going to create the cash flow in a tax effective manner, and know what you will do in your personal life after you exit? Here hardly anyone raises their hand, but I do usually hear a few laughs.
The primary business continuity document, your lawyer will prepare is called the Buy/Sell agreement. This document ought to manage the risk of the 5Ds: Divorce. Death. Disability. Disagreement.Departure.
The Info graphics below (compliments of the Principal Financial Group) highlights the key components of the Buy/Sell. If you already have a Buy/Sell agreement in place which is not addressing all of the 5Ds stated above, your documents may be worth re-visiting.