Issue link: http://read.dmtmag.com/i/81015
MANAGEMENT Preparing for an Ownership Change By Rob Morris, CPA Tips for a smooth transition when your winery changes hands When my colleagues and I at the Frank, Rimer- man + Co. accounting firm sit down with a cli- ent for the first time, we make sure to discuss the full spectrum of historical and current facts, their implications and the range of potential out- comes so that we are certain we have our cli- ent's short- and long-term interests in mind. To best accomplish a high level of service with our clients who own and run their own businesses, we feel it's imperative to under- stand their eventual "exit strategy" and goals for distributing any sale proceeds. Owners and operators of a winery/vineyard are often choos- ing between transferring the business within AT A GLANCE Eventually, every business will change hands – whether it's within the same family or sold to an outsider. Planning for this eventuality early on will help make the transition smoother. There are many ways to reduce taxes related to transferring ownership. Have your winery appraised by a certified inde- pendent valuation expert. 58 VINEYARD & WINERY MANAGEMENT SEPT - OCT 2012 their own families or selling it outright upon the owner's retirement or death. We believe that all business owners should ask the following ques- tions as they examine their long-term goals: When should I start thinking about a transi- tion strategy for my business? Who should I recruit for a "team" to give me the best advice? When, if at all, should investment bankers get involved in this process? EXIT STRATEGY Ideally, the first exit strategy discussion begins prior to the formation of the business. This may sound like putting the cart before the horse, but the type of entity structure used can have massive implications on tax liabilities, cash flows, asset protection, ownership trans- ferability and valuation. Investing in strong tax, accounting and legal advice will help avoid mis- steps and traps for the unwary. Insurance may also have a critical role to play here. Strategic discussions with these team members should be core to the business's initial planning. If the transition plan involves a sale to an out- side party and an exit is imminent (i.e., within WWW.VWM-ONLINE.COM Photo: Thinkstock