Case Study 5 – Selling One Business & Starting Another
Innovative Thinking Leads to Creative Solutions for Client Selling One Business & Starting Another
Client Situation:
A business owner sought assistance from Ironwood Investment Counsel while in the process of selling his company to a publicly traded firm. But not resting on his previous business success, the client was eager to begin seeking a new business venture.
Client Objectives:
The client’s initial objective was fairly straightforward: To manage some of the proceeds from the sale of the business. After a thorough needs assessment and discovery process, however, Ironwood uncovered additional needs and objectives for the client including the following:
- Working with his accountant and attorney to maximize tax efficiency for his balance sheet while minimizing potential estate tax
- Managing his overall capital market portfolio in a tax efficient manner, while also taking into consideration other assets and commercial real estate investmentss
- Modeling short- and long-term cash flow needs through a retirement plan framework
- Establishing a tax-efficient portfolio to fund the new business venture
How We Helped:
Ironwood provided solutions for the client in two main areas of need, investment management and wealth planning.
For investment solutions, Ironwood developed and managed a tax advantaged, fixed income portfolio to fund capital needs for the new business venture. To meet the client’s retirement objectives, Ironwood crafted a tax advantaged, balanced portfolio of individual equity and fixed income securities, as well as funds for other asset classes. “Our primary focus was to select high-quality investments that truly fit the financial goals for this client, which meant clearly understanding objectives, and matching those goals with a highly customized investment strategy,” explained Matthew Carter, a Partner at the firm. “Of course, we continue to actively manage the portfolio to ensure we stay on track to meet the client’s objectives, which are fluid in nature.”
In terms of wealth planning solutions, a short- and long-term cash flow plan allowed the client’s estate attorney to identify strategies to reduce estate taxes, while the portfolio focused on high quality equities and fixed-income instruments met the client’s long-term living expense objectives, legacy wishes, and existing asset management needs. Additionally, Ironwood collaborated with the client’s CPA to establish, fund, and manage a Defined Benefit plan to reduce the client’s overall tax liability.
Overall Results:
The client was able to successfully reduce his overall tax liability and fund his new business venture, while also establishing a robust investment and wealth management plan for himself and his family.
*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.