The Hidden Cost of Not Planning Your Business Exit In Advance: Insights from Questmont Virtual Family Office

For business owners contemplating a sale, here’s a sobering statistic: while 20-25% of owners who want to sell their business manage to complete the transaction, only 3% end up highly satisfied with the outcome. The primary culprit? Inadequate planning, particularly around tax strategy. 

In a recent conversation with Taylor Ranker, President and Founder of Questmont Virtual Family Office, we explored why tax planning remains a critical yet often overlooked aspect of business exits, and what owners can do to protect their legacy. 

 The Planning Gap 

“One of the biggest myths in our industry is that tax planning is getting done,” explains Taylor. “Most business owners mistake tax preparation for tax planning, but they’re fundamentally different activities. While your CPA might be excellent at compliance, they’re often too consumed with deadlines and current-year returns to engage in sophisticated exit planning.” 

This distinction becomes crucial when preparing for a business sale. Taylor notes that the resources that helped build the business often aren’t sufficient for optimizing its sale: “The expertise that got you to where you are today won’t necessarily get you to where you want to go tomorrow.” 

 The Real Cost of Inaction 

When asked about the consequences of inadequate planning, Taylor’s response was pointed: “Someone you love is going to pay the price – whether that’s your children, charity, spouse, or employees. You need to ‘get off of your assets’ and do the planning if you want to leave these people or groups the security you intended.” While your exit may provide for you, only proper planning will ensure it also provides for your legacy. 

 Strategic Approaches to Tax Planning 

Questmont’s team has successfully implemented various strategies to help business owners optimize their exits, including: 

• Tax loss harvesting with long-short strategies
• Deferred sales trusts
• Charitable remainder trusts created pre-sale

The size of the business can influence available options. Larger valuations might open doors to sophisticated tools like GRATs (Grantor Retained Annuity Trusts) or charitable remainder trusts. However, the advisor emphasizes that planning remains crucial regardless of size: “With smaller deals, the tax savings might actually matter more because there’s less money to go around.” 

 Staying Ahead of Tax Trends 

Looking forward, Questmont maintains an optimistic outlook on the tax landscape, anticipating potential extensions of tax cuts and the possible return of provisions like bonus depreciation. Their approach to staying current involves dedicated U.S. and global research teams focused on tax code analysis and optimization strategies. 

 Taking Action 

For business owners, the message is clear: proactive tax planning is not just about saving money—it’s about protecting your legacy and ensuring your exit achieves its intended impact. Regular business valuations (recommended every two years) combined with strategic tax planning can dramatically improve the odds of a successful exit. 

“Inertia is insidious,” Taylor warns. The time to start planning isn’t when you’re ready to sell – it’s now. 

For qualified business owners interested in learning more about strategic exit planning and comprehensive wealth management strategies surrounding an exit, Align Business Advisory Services offers complimentary no-obligation business valuations, and Questmont Virtual Family Office offers a complimentary copy of their book, “Dead Cats and Wealth Advisors”. Contact us to learn more about these, and how to identify gaps and opportunities in your current exit strategy. 

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This article is for informational purposes only and does not constitute legal, tax, or financial advice. Readers should consult qualified professionals regarding their specific circumstances.