Selling a business is a significant milestone for any owner, often marking the culmination of years of hard work and dedication. It should be a time of reflection; not become a burden because of the unknown.

Whether you are years from exiting a business, in the thick of negotiations or the dust is settling upon a completion, financial planning helps make the future clearer, providing peace of mind about future income versus expenditure , reducing tax exposures and taking advantage of any opportunities, some of which could be time bound.

We believe long-term financial planning is crucial to ensure that the benefits of this milestone extend well into the future, and having the right guiding hands around you for this journey is key. Our Financial Planners have helped many business owners with their financial planning needs before, during and after a business sale.

Here are key considerations to keep in mind when thinking about your future personal financial planning strategy:

Make a plan

This may be a dream for a decade ahead or further, but don’t let that stop you. Before you know it, years will pass, and you cannot go back in time to do things differently. During our review meetings, we understand what you want the future to look like, what needs to be in place and what actions you should be taking in the here and now to help make your dream become a reality.

For those owning and running their own business, it is vital to plan for the ‘exit’. Will circumstances change? Almost definitely, so you want to be flexible for what comes your way and change your expectations and finances to suit.

Knowing what you need to achieve from a sale can be empowering. Do you want to realise the best value you can for your business? Of course you do! Yet, the stars won’t always align, so knowing what you need is a powerful piece of information, even if it may be a lower amount than what you would like.

Some say the most valuable commodity in life is time and yet it is the only thing you cannot buy more of, so if exiting at a lower value was to give you more time for the next chapter of your life, to focus on what is important to you such as family and travel, it may be worth a significant value if it allows you to lead the life you want sooner.

Pre exit planning

Don’t wait until the end to make the most of opportunities. In the final years of owning a business, it is not uncommon to see business owners fund pensions heavily. Yet, this should be a strategy throughout the lifetime of your business. Maximising pension contributions and looking back at unused allowances could reduce the Corporation Tax your business has to pay in the short term, give you a personal asset to fall back on in the meantime, an income in retirement and an asset that can be used for succession, passing wealth on efficiently to the next generation.

Who knew a pension could be so versatile?

Replacing business benefits 

It is important to review what might be lost upon an exit. If you currently have benefits via the business, when you exit, you will no longer have them. A typical example of this would be private medical insurance and life insurance. To ensure continuity, it is important to understand whether they are still required and where needed, the steps to keep them. It will likely mean putting alternative cover arrangements in place.

Post exit planning

Having a plan for what comes next is just as important. On a successful business exit you will likely have become cash rich, which sounds great, but this comes with its own problems.

• Where will you take your income from?
• How do I keep my capital safe?
• How do I make my capital work?
• How do I help my family
• What are the implications for Inheritance Tax?

All these questions and more are best answered ahead of time.

Lifestyle considerations

Consider how the sale will impact your lifestyle. Many business owners find it challenging to adjust to life after selling their business. Having a clear vision of what you want to do post-sale, whether it’s starting a new venture, engaging in philanthropy, or pursuing hobbies, can provide direction and fulfilment.

Professional advice

Seek advice from professionals, including: accountants, legal advisors, industry experts and financial planners. Their expertise can provide invaluable insights and guidance throughout the process, ensuring that all aspects of the sale and subsequent financial planning are thoroughly covered. Our colleagues in the Corporate Finance team at Johnston Carmichael can advise you on preparing for the exit. [link Corporate Finance | Chartered Accountancy | Johnston Carmichael]

Regularly review your plan

Life is complicated and guaranteed to change whether that is legislation, or your own circumstance. Standing still could mean you're not making the most of your future so make sure to take time to review your circumstances at least annually.  

The exit from a business, no matter what route is chosen, is complicated and it is vital that you surround yourself with trusted professionals that will guide you from the start of your journey to ensure a smooth transition and secure financial future, enjoying the fruits of your labour with peace of mind.

If you would like to discuss anything mentioned in this article with one of our experienced financial planners, please do not hesitate to get in touch with myself or a member of our team.

Disclaimer: Johnston Carmichael Wealth Limited is authorised and regulated by the Financial Conduct Authority. 

This communication should not be read or considered as financial advice. While all possible care is taken in the preparation of this communication, no responsibility for loss occasioned by any person acting or refraining from acting as a result of the information contained herein can be accepted by this firm.