Building Value in Businesses and Professional PracticesJoseph D. Blair, CFP®, Senior Vice President, Wealth Management, Univest Bank and Trust Co.
Maximizing the value of a business starts with a plan. It helps to think about building and selling businesses not as individual events but as long-term processes. To capture the full value of a business or practice, the owner must devote careful attention over time to several aspects of financial planning:
- It is never too early to prepare for succession with buy-sell
agreements, disability protection and related strategies. On the
contrary, financially successful entrepreneurs often think about
the end-game from the beginning stages of an enterprise. A good plan will provide sufficient flexibility for changes that
occur as the corporation or partnership evolves and grows.
- To avoid paying a lot more in taxes than the government
requires, a business owner must plan ahead for using key
provisions of the tax code. Depending on the type of business,
examples may include: deferred compensation, Section
162 bonus plans, split dollar and Section 6166 installment
- In many small businesses, planning for succession brings in
the complex dynamics of a family. Detailed financial planning
can offer an objective structure for these discussions.
- By locking in at least a portion of their funding for succession in
advance, businesses can avoid the harsh penalties associated
with a distressed sale or lack of liquidity for a transaction. A
well-documented funding strategy can also provide significant
tax benefits by establishing a value of the enterprise for tax
- Without deliberate planning, sole owners of businesses face a
significant risk of losing or giving away their asset of greatest
overall value. Univest's professionals in wealth management emphasize this important piece of the owner's personal
balance sheet when preparing a financial plan.
- A business owner with financial sophistication sees that an effective succession plan goes hand-in-hand with a retirement plan that is crafted to meet his or her own goals (vs. the one-size-fits-all strategy of many 401(k) plans). Univest's retirement services team understands the importance of tailoring qualified and non-qualified plans to an owner's individual objectives.
Univest Bank and Trust Co. provides a full range of assistance with banking, insurance and investments. As in all relationships, Univest professionals in Wealth Management work closely with the tax, accounting and legal advisors of business owners when developing financial plans. Contact us at 215-721-8386 or firstname.lastname@example.org.
Investment products offered by Univest Bank and Trust Co.'s Wealth Management and Trust Division and Univest Investments, Inc., member FINRA and SIPC, a licensed broker dealer and investment advisory subsidiary of Univest Corporation of Pennsylvania, are not insured by the FDIC or any federal government agency, are not a deposit or other obligation of or guaranteed by the depository institution, and are subject to risks, including the possible loss of principal amount invested.