A New Reality

Regardless of who you voted for, you are waking up to a different world. We have a new president elect and that will likely be a factor in setting the course for the next 4 years.  Some of you will be thrilled, others disappointed.  Most will be glad it is over.

new reality graphic

President Barack Obama has served 2,849 days since his first inauguration on January 20, 2009. But he isn’t done; he has 73 days left to serve.  If he is like other second term presidents following the election, he has a lot he still wants to get done and I doubt he will spend much time looking beyond the end of his term.

Many business owners selling to an Employee Stock Ownership Plan (ESOP) understand this all too well. Often, the selling owners will continue to be an integral part of the company into the future, even if only for a short time.  This may be a requirement of the bank lending to fund the transaction.  It may be the owner’s choice as they are financing all or part of the transaction and wanting to stay there through the repayment period.  Or, it may be that the ESOP has a minority position and it is business as usual.

Much like an outgoing president, selling business owners share many of the same concerns. They are often focused on their legacy.  They want to take steps to maintain those qualities that made the company successful.  They want to recognize those that helped them generate success.  They want the next leaders positioned for continued growth and profitability.

At the same time they need to chart their next course. While few will experience the type of lifestyle change an outgoing president does, many will experience dramatic change.  Some will be able to ease into retirement over time.  For others it will be more abrupt.  The time to start preparing for retirement is well before the retirement party.  Often times the financial issues take precedence with less attention on the lifestyle issues.  But for those that spent a career building a business, the change can be difficult.

We get a new president every four to eight years. Most business owners only do this once.  Careful planning is essential for success.

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Follow @twitter 

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The subject matter in this communication is provided with the understanding that Principal® is not rendering legal, accounting, or tax advice.  You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

t16100307ne – 10/2016

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