Exit Planning: Turning Company Value into Retirement Income

Ask a business owner what their retirement plan is and a common answer is: sell the business. It can be an excellent plan. It is rarely a complete one.

Why three years, not three months

Buyers pay for predictability. A business that depends on the owner personally, has concentrated client risk, or cannot produce clean management accounts will be discounted. Most of what improves a valuation takes time to demonstrate — typically two to three years of evidence, not a tidy-up before a sale.

The questions that come before the sale

• What net figure do you actually need, after tax and costs, to fund the retirement you want?

• How does the structure of the deal affect the tax you pay, and could reliefs apply?

• Is any of the proceeds better directed into a pension before the sale rather than after?

• What happens to your income between the sale and drawing your pensions?

• What will you do on the Monday after? The financial plan and the personal one are connected.

The mistake to avoid

Leaving the personal financial planning until the deal is agreed. By then most of the useful options — pension contributions, structuring, timing — have narrowed considerably. The planning that adds most value happens while the sale is still hypothetical.

If nobody has run these numbers for your company, that's exactly what we do. Book a free, no-obligation call at www.dmfinancialplanning.co.uk.

Important information

This article is for general information only and does not constitute personal financial advice. The value of investments can fall as well as rise and you may get back less than you invest. Tax treatment depends on individual circumstances and may change. A pension is a long-term investment; funds cannot normally be accessed until age 55 (57 from 2028). DM Financial Planning is a trading style of Aegis Financial Planning Limited, authorised and regulated by the Financial Conduct Authority (FCA No. 624298).