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V O L . X X V I N O. I X M AY 5 , 2 0 2 0 22 W E A LT H M A N A G M E N T / R E T I R E M E N T F O C U S Dynamic process Jean, Bacon's accountant, starts by helping owners identify their financial objectives. "rough that discovery process, we get to understand their financial needs during retirement, what the business is worth, and what's the best avenue for transition," he says. "Is it a third-party sale, a transfer to the next generation, a sale to a management group or a private equity group, or perhaps an employee stock ownership plan? rough the discovery process, we help formulate a plan." Not having a plan can take a toll on the business, particularly if an owner's departure is unexpected, says Jean. For a business with multiple owners, the departure of one can take place smoothly through a transfer of interest. "It becomes a real problem if you're a single owner," he continues. "If some- thing happens to you unexpectedly, what happens to the ownership of the company? Will it go to a spouse? Will it be a liquidation? Will it be up to the spouse or a general manager to put the company up for sale? At that point, it's difficult to know what's going to hap- pen without knowing what the plan is. Often the spouse doesn't want to oper- ate the business. You might have key employees who don't want the business either. en it becomes s a fire sale and significantly reduces the value of the company, and you're putting the com- pany and employees at risk." e process can be emotional. "A lot of owners have spent their lives building their business and it's difficult for them to decide when and under what circumstances they'll give up control," says Nathaniel Putnam of Eaton Peabody's Bangor office. Succession planning always has a fairly significant element of uncertainty in it, says Gretchen Jones with Eaton Peabody's Brunswick office. "I always tell clients that succession planning isn't something you do once and then put on the shelf and leave it there. It should be a dynamic and ongoing process because things change all the time." Pressing pause e pandemic is the very definition of that uncertainty. Previously, the strong economy resulted in many business owners exit- ing because valuations were high and companies had the cash flow to buy out owners, says Jean. Now, he says, "e uncertainty could delay a lot of folks who were planning to exit, maybe another year or two, until things normalize again." He adds, "To some extent this could affect the value of companies that had been in the process of put- ting together a plan. And it could impact the company's ability to pay the parting owner. Right now, there's a lot of wait and see." Clients are busy dealing with keeping their businesses going, says Hans Peterson, a partner at Rudman Winchell in Bangor. "I think for most people, putting a moratorium on the planning process for six months isn't that big a deal," he says. "'I want to have a business that I can sell to someone' — that's the concern." e pandemic will likely impact the planning process in the future, he says. "People will ask questions they've never asked before," he says. "It's human nature to say, 'If this happened once, it can happen again.' We're already seeing that in other contractual provisions." For example, the legal community is debating whether pandemics are covered under a contractual provision called the "force majeure clause," which excuses performance obligations under certain circumstances. "I think," says Peterson, "it's going to make people acquiring the business and the people selling the business ask the question, 'What happens if there's another stay-at-home order in the future? What happens if the busi- ness can't operate because there's an order that says it's non-essential?' I'm not sure anyone will completely scrap their old plan when we come back. But I think people will say, 'ere needs to be a discussion if this kind of thing happens again.'" Laurie Schreiber, Mainebiz senior writer, can be reached at lschreiber @ mainebiz.biz » C O N T I N U E D F RO M P R E V I O U S PA G E We are here for you. Building an Economy that Works for Everyone From Wicked Fast working capital loans to business advice and policy advocacy, CEI is here to help Maine's small businesses. 207.504.5900 www.ceimaine.org to all of our first responders, healthcare workers, public service professionals, and EVERYONE else working around the clock in the fight against the COVID-19 pandemic. We truly appreciate you. Thank You! www.KennebecSavings.Bank David Jean David Jean at at Altus Exit Strategies Altus Exit Strategies starts by the planning process by helping starts by the planning process by helping owners identify their financial objectives. owners identify their financial objectives. P H O T O / T I M G R E E N WAY

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