Roles of the Lawyer in the Seven Step Exit Planning Process

Steps 1 and 2

• Assist in determining appropriate type of valuation
• Help select valuation advisor depending on owner's objective (sale to third party or transfer to insiders)
• Evaluate methods of reducing business value
• Opportunity:
• Provide new services and value to existing clients

Step 3

• Provide legal and practical advice in regards to possible recommendations
• Identify tools to protect business value during periods of growing or flat performance
• Analyze federal and provincial law implications of proposed strategies
• Opportunity:
• Meet with client, typically 3-15 hours
• Draft summaries of recommended documents, as well as final documents
• Fees typically range from $5,000 to $50,000

Step 4

• Prepare draft of Stay Bonus, incentive plans and employment agreements
• Tax analysis related to the proposed sale of company
• Legal Due Diligence
• Preparation and review of all transaction documents
• Opportunity:
• Representation of owner/business in sale (generating fees of $30,000 to $150,000)
• Respond to post-closing indemnification claims

Step 5

• Analyze legal issues related to proposed transactions (state law, federal law, tax law, compliance with existing documents)
• Draft summaries of proposed agreements
• Draft and implement agreements and other documents implementing transfer/s
• Draft documents providing incentives to key employees not receiving ownership
• Opportunity:
• Generate revenue from creation of documents that implement one or more ownership transfers. (Generally fees not less than $5,000 and up to $25,000)
• Ongoing consulting fee income and continuation of business representation through ownership transition
• Continued representation of business after the successor owner taker control
• Generate fees on a flat or hourly basis for document drafting, implementation and follow-up

Step 6

• Prepare business and estate planning documents
• Prepare Stay Bonus Agreement
• Assist owner in positioning business to operate independently if owners is unable to remain involved
• Opportunity:
• Prepare business continuity documents (Fee generally between $3,000 and $7,500)
• Implementation of documents and agreements if a death or disability occurs

Step 7

• Perform overall estate planning
• Revise and update estate plan as circumstances change
• Coordinate planning for business and non-business assets when a child is the proposed successor owner
• Educate owner on structure and function of estate planning strategies
• Transfer business interests to children prior to a third party sale
• Create related entities to be partly owned by children
• Perform charitable income/estate tax planning
• Suggest and/or confirm recommendations made by the Certified Exit Planner(CExP)TM
• Opportunity:
• Collect fees for creating and updating estate planning documents (Fees generally between $5,000 and $25,000)
• Collect hourly fees for family meetings to explain planning to beneficiaries
• Collect probate and estate administration fees
• Manage personal asset protection and transfers