Case Study 1 – Owner Selling Business
Pinpointing Optimal Solutions Requires an In Depth Needs Assessment for Owner Selling Business
Client Situation:
Acting on an exciting opportunity to sell their successful technology company, our clients came to Ironwood Investment Counsel for advice on how best to invest and manage the proceeds from the sale of the business in order to effectively meet their family’s short and long-term goals. These goals included building their dream home in another state to serve as their primary residence.
Client Objectives:
Initially, the clients presented Ironwood with two main objectives: 1) Use the proceeds from the sale of the company to fund their retirement. 2) Devise a plan involving the portfolio and appropriate lending solutions for the construction of the family’s new home.
Through the interview and discovery process, Ironwood learned it could also assist the clients in the following areas:
- Address short and long-term cash flow needs through a retirement plan framework
- Plan for the financing of their dream home and eventual sale of their current residence
- Coordinate education funding and management for their children’s college expenses
How We Helped:
Since the client was poised to gain significant taxable income from selling the business, exercising stock options, and serving as a highly compensated officer for the buyer of the business, Ironwood placed a strong focus on tax efficient investment options.
To address the clients’ wealth planning objectives, Ironwood developed a short and long-term cash flow plan around their living expenses, legacy wishes, and real estate goals. Ironwood also collaborated with the clients’ estate attorney to identify strategies to reduce their taxable estate.
Ironwood also worked with a professional lending team to develop a tax-advantaged fixed income portfolio to fund capital needs for the home construction. Similarly, Ironwood crafted a tax-advantaged balanced portfolio of individual equity and fixed income securities, and institutional class funds for other asset classes to meet their retirement objectives. “We were able to effectively customize our client’s portfolio by first identifying the required return for the proceeds from the business sale, and second, by taking into account the client’s intention to sell stock options at some point in the future,” said Matt Carter, a Partner in the firm. “That framework allowed us to pinpoint the right investment options for this client’s individual situation.”
Overall Results:
The clients were able to successfully reduce their overall tax liability and fund the construction of the family’s new home, while establishing comprehensive investment and wealth management plans to meet their short and long term financial goals.
*Please Note: Limitations: The above Case Study is hypothetical-not involving actual Ironwood clients. The Case Study illustrates the hypothetical experience of a fictitious client based on a scenario that an actual client might experience. The Case Study is designed to generally illustrate how we may provide our services to our clients. Keeping in mind that no two clients, situations, or experiences are exactly alike, the Case Study is not to be construed as an endorsement of Ironwood by any of its past or current clients, nor any assurance that Ironwood may be able to help any client achieve the same satisfactory results. To the contrary, the Case Study should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results or satisfaction if Ironwood is engaged, or continues to be engaged, to provide investment advisory services.