Life After the Business Sale

For a business owner looking to sell their business, putting advance thought to what you want to do with the next chapter in your life is as important as finding the right buyer and  the best price for your business.

Planning for a life of purpose will take the same level of strategic thought and due diligence that was required to make your business a success. This article will focus on the necessary steps involved to make the best charitable impact from your business windfall.

Moving from business success to charitable significance requires a plan.

What is Your Why? Defining Your Charitable North Star

Introspection is needed. During your working life, what causes or organizations were important to you? How did you support them? How involved were you in helping them meet their mission?

Devoting the next chapter of life to philanthropy requires the following:

• Values: What resonates with you and your beliefs? Do you want to provide greater, deeper support to organizations you already know? Do you want to invest in new organizations that help solve different parts of issues you already support? Do you want to investigate completely new causes that interest you that you may not have been able to provide support to in the past?

• Focus: Once you have determined your values, focusing on specific help, such as geographic area, specific cause, specific audience or specific institution/program allows your dollars to make the strongest impact available.

• Family: Involving family members to help you make these decisions can not only prove insightful but can act as a way to build a generational legacy that allows your philanthropy to last beyond you.

Advance Planning = Tax Efficiency

Planning to give in advance is as important as the gift itself. Donating a portion of your business ownership directly to a charitable vehicle before the sale of your business is key.

By doing so, you are able to avoid the capital gains tax bite that occurs on the donated portion. Regardless if your interests are in C-corp shares, S-corp shares, or some other closely-held stock, the necessary steps taken in the right order and at the right time are important to providing you with the  charitable assets available to make the strongest impact possible.

Depending on the amount of assets will help determine  what type of charitable vehicle may be best for you:

• Donor Advised Fund: This is a charitable investment account in which assets placed into it can only be granted out for charitable purposes. By contributing assets into it (such as private stock) allows you to gain an immediate tax deduction but determine over time what causes you want to support with your asset value.

• Private Foundation: For those with asset amounts exceeding over $2 million, a private foundation may make sense. It allows you to have complete control over investments, but also requires administrative complexity, payout requirements, and higher costs to manage the holdings.

You Are Worth More Than Money

It’s not just about what financial value can you offer, but also your time, talent and network.

• Time & Talent: Without the daily concerns of running your business, you now have time. Coupled with your business acumen built over a lifetime of experience, you can lend expertise as a board member or an active volunteer to your favored causes.

• Network: Leveraging your peers, past clients, and other business partners can help your chosen charities access help or resources that might not have been easily available.

Transition Plan: An Emotional & Financial Blueprint

You need a blueprint that addresses your new financial reality and meets your emotional needs of purpose & direction that your business life offered you. Before you sell your business, you will have wanted to determine a “giving budget” that allows you to meet your personal financial needs and the charitable impact you want to make.

You will also want to determine an “attention budget” … how much attention do you want to give to the charities you support. Do you want to be a board member who only needs to attend a monthly meeting? A volunteer who helps a set number of hours each week? Or someone who helps chair a fundraising event or campaign drive? Determining your time and energy commitment to a charity is an important consideration.

Conclusion

Moving from a life of business success to charitable significance takes thoughtful planning. Relying on the expertise of Generosity Nexus can help you manage not only the financial details of the business exit but help you build a path that satisfies your desire to help your favorite causes and write a new story in your life.

Don’t hesitate to schedule an appointment to learn more about how we can help you.