Bob Gauvreau covers four ways to exit a business: sell to an employee, private equity firm, competitor, or outsider. Share sales let you use the lifetime capital gains exemption, while a freeze technique lets a successor take over without having the cash to buy you out.
There's a few ways that we can create access for an exit. One is to have an external buyer that could be somebody who is either an internal employee or private equity, or a competitor or an external party. This would require us to come up with a value and sell assets or shares to a potential buyer. There's benefits to doing an asset sale and a share sale. If you're in a particular business and you want to sell everything that's part of it. We want to try and structure a share sale. Part of the reason is there's a lifetime capital gains exemption. Alternatively, if we sell assets, we don't get that same access to a tax deduction. There's other ways that we can structure a succession plan. For example, you've got your kids or you've got somebody in your business that wants to take over, but they don't have the funds to come up with to pay you to exit. We can actually take the company value, let's say it's a million dollars, and we can freeze the value at a million dollars and that becomes your share ownership.
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