About You . | . Client Profiles

Reaping the reward of a successful business
A client aged 60 owns 100% of a successful S Corporation that employs 50 people. After spending many years building the business, he has turned his attention to exiting the company with maximum payoff. The client’s top goals were to reduce his work hours for the next 5 years without drastically reducing his net income, to sell his shares in the business to his loyal employees who will succeed him after retirement, and to mitigate the impact of taxes on his net return on the business.

Working with a team of CPAs and attorneys, the advisor recommended the creation of an Employee Stock Option Program (ESOP) and installment sales plan. With the ESOP, the client gradually sold shares in the company to his employees. The client’s reduced income due to reduced work hours was more than offset by the installment sale proceeds which were taxed at the preferable long term gains rate. In addition, the client was able to maintain control of the company throughout the transition period, while employees used a combination of commercial financing and cash flow to acquire the seller’s shares.

This client profile should be viewed as hypothetical even though some details may be specific to strategies developed for actual clients. They are for illustrative purposes only intended to demonstrate the capabilities of Hines Warner. They are not intended to serve as investment advice since the availability and effectiveness of any strategy are dependent upon your individual facts and circumstances. Results will vary, and no suggestion is made about how any specific solution or strategy performed in reality. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy. Future performance can never be guaranteed.