Spotlight: Maximizing the Sale of a Family Business

In this case study, follow Elle and Tom as they journey through the sale of their business. Learn how they navigate the decision to sell, plan ahead to optimize the outcome, and prepare for their post-sale path forward.

Elle and Tom own a manufacturing company based in Texas that they have built over 15 years. They also have two teenage children — Harper and Kayla. Now that their children are about to head off to college, Elle and Tom decide to start thinking seriously about selling their business.

The couple meet with their Northern Trust team, who walks them through a goals-driven analysis that illustrates various scenarios — keeping the business, selling the business for more than they expected, selling the business for less than they expected — to help them understand the financial impact on their family under each scenario.

As a result of their discussions, Elle and Tom decide to sell the business. They work with their estate planning attorney and their wealth advisor at Northern Trust to implement certain changes to their estate plan prior to the sale, including: gifting 35% of the shares of their business to a trust for their children, and donating $2 million worth of shares of the business to a charity they identified with help from Northern Trust’s Philanthropic Advisory Services team.

Elle and Tom are then introduced to Northern Trust’s Business Advisory Services team, who helps them interview and hire a team of advisors, including an investment bank and an accounting firm, to sell their business. Working with their advisors and the Business Advisory Services team for several months, Elle and Tom successfully sell their business for $40 million. As a result of the estate planning strategies that Elle and Tom implemented prior to the sale, they are able to leave their children and charity with an additional $3 million.

After the sale, Elle and Tom work with Northern Trust’s Family Governance and Education team to adopt certain best practices for discussing with their children their estate plan and the responsibilities of their newfound wealth. Their children also sign up for one of Northern Trust’s Financial Essentials courses — Investing 101. Finally, Elle and Tom work with their Northern Trust team to develop an investment plan for the sale proceeds and meet with the Commercial Real Estate team to discuss strategies for investing a portion of the proceeds in real estate.

Northern Trust works with ultra-high net worth business owners and entrepreneurs to navigate business transactions and plan for their personal wealth. To learn more about the services we offer, contact a Northern Trust advisor today.