Goodwill Hunting

Let's face it, finding out that you paid twice as much for an airline seat as the guy next to you is bothersome. But finding out that one of your clients netted dramatically less on the sale of his or her family business than a similarly situated family is disastrousand avoidable. As financial advisers, you owe it to your clients to help maximize the value of their assets, including their businesses in the event of a sale.

A little known technique used primarily in the sale of corporate-owned family businesses can dramatically increase the after-tax proceeds of that sale. Simply stated, it's a strategy that recognizes the fairly commonsense reality that a substantial part of the goodwill of a family business is really owned by the individual shareholders of the corporation, not by the corporation. Let's see how it works.

A Tale of Two Companies

Ima Blue formed her business 30 years ago. On her accountant's advice, she formed a corporation, funded it, and then proceeded to build a strong reputation for quality and service in her field. The corporation, Blue, Inc., has always been a C corporationthat is, it ... // 92% Remaining