Your Business May Be Your Largest Financial Asset

For many business owners, the business represents far more than a source of income. It may be your largest financial asset, your retirement plan, your family’s financial security and the result of decades of work.

Yet some of the most important questions surrounding that asset are often left unanswered.

What happens to the business if something happens to you?

How will ownership eventually transition?

Is your buy-sell agreement actually funded?

What happens financially if you become disabled?

What would happen if you received an offer to sell the business tomorrow?

And perhaps the biggest question:

What does all of this mean for your personal financial life?

At Catalano Financial, business owner planning is about connecting the value you’ve created inside your business with the life you want that value to ultimately support. That may involve succession planning, risk management, retirement and investment planning, preparing for a future liquidity event, and coordinating with your attorney, CPA and other professionals. Catalano Financial provides business owner financial planning in The Woodlands, Texas, with a focus on succession, business transitions and coordinating business value with personal wealth.

Because eventually, every business owner exits the business. The question is whether that transition happens according to a plan.

What Happens to Your Business When You’re No Longer Running It?

Every business eventually goes through a transition.

You may sell to an outside buyer. Transfer ownership to family members. Sell to employees or partners. Gradually step away. Or an unexpected death or disability may force a transition before you planned for one.

A succession strategy begins by asking what you want to happen—and whether the financial and legal pieces are actually in place to make that possible.

Questions may include:

• Who should eventually own the business?
• How will the business be valued?
• How will a purchase of your ownership interest be funded?
• What happens if an owner dies or becomes disabled?
• How will the transition affect employees, partners and family members?
• How much of your personal wealth and retirement plan depends on the value of the business?
• What happens to your financial life after the transition?

Catalano Financial can help you examine the financial implications of succession and coordinate that work with the attorneys, accountants, insurance professionals and other advisers involved in the transition.

A Buy-Sell Agreement Is Only Part of the Plan

A buy-sell agreement can establish what should happen to an owner’s interest after certain triggering events.

But an agreement alone doesn’t necessarily create the money needed to complete the transaction.

Life insurance may provide funding following an owner’s death. Disability buy-out insurance may be considered when a long-term disability triggers the purchase of an owner’s interest. The appropriate structure depends on the business, owners, agreement and insurance arrangements.

A succession plan should answer not only who gets the business—but how the transition will actually be funded.

Preparing for a Business Sale or Liquidity Event

Selling a business can turn years—or decades—of work into a significant amount of personal wealth almost overnight.

But the financial planning shouldn’t begin after the money arrives.

Ideally, planning begins well before a transaction, when there may still be time to consider how the sale could affect your personal finances, retirement, investments, estate plan, insurance needs and charitable goals.

Questions worth addressing may include:

• How much do you actually need from the sale to accomplish your personal goals?
• What will your financial life look like when the business is no longer producing your income?
• How should sale proceeds eventually be invested?
• How much liquidity should you maintain?
• How will the sale affect your retirement income strategy?
• Are there estate or charitable planning opportunities that should be explored before the transaction?
• Which decisions need to be coordinated with your CPA and attorney before the sale closes?

Catalano Financial does not replace the attorneys, CPAs, valuation professionals or transaction advisers involved in selling a business. Our role is to help you understand what the transaction means for your personal financial life and coordinate your financial strategy with those professionals.

From Business Owner to Investor

A liquidity event can create a fundamental shift.

For years, much of your wealth may have been concentrated in one asset you understood extremely well: your business.

After a sale, you may suddenly be responsible for managing a diversified pool of liquid wealth—and making that money support you and your family for decades.

That’s where Strategic Wealth Management can become especially important.

Protecting the Business—and the People Behind It

A succession plan also needs to consider what happens when the unexpected occurs.

Depending on the business and ownership structure, insurance may help address risks such as the death or disability of an owner or other key person.

Life insurance may help fund a buy-sell obligation, provide key-person protection or create liquidity for an owner’s family or the business.

Disability insurance may help protect an owner’s personal income, while disability buy-out coverage may provide funding when a qualifying long-term disability triggers the purchase of an owner’s business interest.

The important question is not simply whether insurance is in place.

It’s whether the coverage, buy-sell agreement and succession strategy actually work together.

Your Business and Personal Wealth Are One Financial Life

For many business owners, the line between business planning and personal financial planning is difficult to separate. The value of your business may determine when you can retire, how much wealth you ultimately have, what you leave your family and what opportunities become possible after you exit.

That’s why we believe the business should be considered alongside your Financial Planning and Wealth Management strategy—not separately from it.

Start With Your Financial Road Map®

Whether you’re thinking about succession, reviewing a buy-sell arrangement or beginning to consider a future sale, the first step is understanding what you ultimately need the business—and the wealth you’ve created through it—to accomplish for you.

Your Financial Road Map® helps us begin that conversation.

Financial Road Map® — $500

A 60–90 minute working session focused on what’s important to you, what your money needs to accomplish and where you stand today.

Prefer to learn more about Peter first?