Thursday, May 23, 2024


It Pays to Plan Ahead When Selling Your Company

by Marty Kirshner, CPA, MSA & Joe Ciccarello, CPA, MST; Gray, Gray & Gray, LLP


Secure your financial future, first.

The decision to sell your energy company is not an easy one to make. Whether you are a founder who has built up the business over many years, or the current leader of a multi-generational family business, selling requires a great deal of thought, consideration, and planning. One important factor should not be overlooked: Whatever reason you may have for selling your company, the transaction must result in a financial settlement that meets your long-term needs.

As an owner, you have been focused on running and growing the business. But now once the decision has been made to sell your business, it’s vital that you include steps to plan for your own personal financial future. When you sell your company, it is your big payday. You want to sell it for as much as possible so that, once the sale is complete, you can move forward without second-guessing your decisions or feeling burdened by unmet expectations. This means you must begin planning with the end in mind, and never lose sight of that outcome.

Rhyle & Gary Stull, the third generation owners of Phillips Oil, a home heating family business in northeastern Pennsylvania, had considered selling their company on several occasions. “You have a number in your head as a business owner,” Rhyle acknowledged. But she and Gary were unsure of the price they should set, or even how much they would need to emerge from the sale with sufficient funds for the next phase of their lives. By steering them through the process we were able to help them navigate a successful sale.

Early Planning Leads to Better End Results

One of the most important reasons for early and thorough planning is the potential to maximize financial gains. You’ve invested years of hard work, dedication, and resources into building your business. Now that it is time to sell it is only fair that you prioritize your financial gain. Focusing on your needs will also help ensure that you will maintain control and steer the sale in a direction that aligns with your interests. This can include choosing the timing of the transaction, setting terms and conditions that work best for you, and mitigating risks to help safeguard your financial future.

One caution: Greed, stubbornness, or shortsightedness can lead to negative consequences such as alienating potential buyers. Striking a balance between self-interest and the long-term prospects of your business can help to protect your legacy.

That’s why working with a team you trust – lawyer, accountant, financial advisor – is so important. Your team can help identify ways to strengthen your company’s value and make it attractive to a buyer. Just as important, they can help you understand and plan for the “happily ever after” portion of your life.

What’s Next?

The time to make decisions about what you will do with the money you receive from the sale of your business is not after the deal is done. Whether you plan to fully retire, start a new company, or something completely different, you’ll want to get a financial plan in place before the sale closes.

A key part of deciding what to do with the money after the sale of your business is understanding what your needs will be, what options are available to fund those needs, and what risks are entailed. You should be making decisions in advance about important aspects of your personal financial situation, such as estate planning, gifting, trusts, and asset protection. Knowing what you want to achieve in these areas will influence how you will go about selling the company, from the asking price to how a deal is structured.

For example, when you own a business your net worth is highly concentrated in one asset. Selling gives you the opportunity to diversify your investments and create a broader income stream for retirement. If your company was producing significant cash flow, you will need to assess whether the sale proceeds will allow you to continue to fund your lifestyle.

Chuck Holden, former President of Holden Oil, a third-generation fuel oil and propane company based in Peabody, Massachusetts, engaged our FuelExchange™ service when it was time to sell his business. He quickly discovered the importance of planning early in the sales process. “I did not know how much the business was worth. More to the point, I did not know how much money I would need to retire,” says Chuck. “Having a personal plan to fund life beyond the sale is very key. It really helped to have an advisor on board for that.”

It’s Your Money

Selling a business can be an emotional process, and you want to avoid regrets or lingering feelings of resentment. Maximizing the value you will realize from the sale of your propane or heating oil company by taking a more thorough approach will allow you to be more generous after the sale. Generous with your time, generous with your family, generous in your community.

Marty Kirshner and Joe Ciccarello are Partners in the Energy Practice Group at Gray, Gray & Gray, LLP, a business consulting and accounting firm that serves the energy industry. They can be reached at (781) 407-0300 or powerofmore@gggllp.com.

Business Management
June 2023
selling business
financial plan

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