Should you sell your business when you retire?

Now that you’re at the stage of your life where you’re looking to retire, one of the things you would like to do is to pass on or close down your business. You haven’t decided if you would like one of your children to take over the business or if you would like to sell it to boost your own retirement savings.

To decide what to do in this situation, it’s important to think about your business in terms of what it could do for you or your family in the future. If you sell the business now, will you boost your retirement and be able to pass on wealth to the next generation? If you don’t sell, will one of your children take it over and help it grow into a business that supports your family for many years to come?

Deciding to sell or pass on your business is tricky

It can be tough to decide which path is the right one. To make it easier to decide, the first thing to do is to have a discussion with the potential successors. You may want to talk to your children about their interest in the company. Do they want to take over? If they do not, then it may make your answer clearer.

If your children do want to take over but you were hoping to boost your retirement, you may start thinking about a contract that still provides residual income to you until you pass away. For example, you could ask that you receive 10% of the annual profits in a trust that you’ve already established. This could be a good resolution that helps you bring in money while passing on the business at a younger age.

If you have a buyer in mind, it’s necessary to be cautious with your negotiations. You will want to have your business’s value assessed and to be sure that you’re getting as much money for the transaction as possible. Once the business is sold, you’ll only have whatever income you made from that sale. The sale may also be taxed, which is something to be considerate of while you look into your best succession options.

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