If you’ve been investing in a 529 account, you already know it’s a powerful, tax-advantaged tool to fund education. But oversavingis a concern for families who plan ahead, since withdrawals not used for qualified expenses are subject to income taxes and a 10% penalty on earnings. If you’ve built up more than your child needs, a 529-to-Roth IRA rollover can help those dollars continue working toward the future.
Whether the future involves passing the business to family, joining with another company or selling outright, preparation is important. The owners with the most options are the ones who begin planning long before an opportunity surfaces. If you’re a business owner, here are a few things worth addressing early:
Know what the business is worth.
Valuation is often a blind spot. Owners have invested years and know the sacrifices, relationships and reputation behind the business, but buyers tend to weigh different factors. They tend to focus on profitability, growth trajectory, leadership strength, customer mix and operational efficiency. Preparing early can help close the gap between what an owner believes the business is worth and what the market is willing to pay.
Understand what buyers look for.
Strong businesses often share a few key traits. Predictable cash flow gives buyers confidence that revenue will continue after a deal closes. A varied customer base reduces risk and increases appeal. Lastly, businesses with stable staff and documented processes are easier for buyers to evaluate. Clean, organized financial reporting can streamline due diligence and keep momentum in a transaction.
Think beyond the business.
For many owners, their business represents a significant portion of their personal net worth. As the company grows, it becomes increasingly important to consider strategies for building wealth outside of the business. Engaging in tax planning conversations early can make a meaningful difference, as the structure and timing of a transaction can significantly impact how much an owner ultimately keeps.
Plan before the need arrives.
A common mistake is waiting too long to start these conversations. Buyers are drawn to strong, growing businesses, and delaying planning until challenges emerge can limit options. Even if a sale is not on the horizon, it’s worth considering: what would make me consider an exit? Thinking through that question now creates a roadmap so you’re prepared if opportunity ever knocks.
Davis Hance at Davis.Hance@frostbank.com or (346) 228-7829 can help you evaluate options and prepare for what’s ahead, so that when an unexpected opportunity arrives, you’re ready to make decisions with confidence.
Would you like to talk to a financial professional?
Contact David Hance at Davis.Hance@frostbank.com or (346) 228-7829
Banking services are offered by Frost Bank, Member FDIC.
Trust services are offered by Frost Bank.
Brokerage services are offered through Frost Brokerage Services, Inc., a broker-dealer registered with the SEC and a member of FINRA and SIPC. Investment advisory services are offered through Frost Investment Services, LLC, an investment adviser registered with the SEC. Insurance services are offered through Frost Insurance Agency, Inc., a licensed insurance agency.
Frost Brokerage Services, Inc., Frost Investment Services, LLC, and Frost Insurance Agency, Inc. are subsidiaries of Frost Bank.
Investment and Insurance Products are: Not FDIC Insured | Not Insured by Any Federal Government Agency | Not a Deposit or Obligation of, or Guaranteed by, Frost Bank or Any of its Affiliates | Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested.
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Understand what buyers look for.
Understand what buyers look for.
