(in our final segment of this three part series, we discuss why using a PEO can facilitate the buying and selling of a business.)
Exit Strategy and Tax Planning
Having a business in “sale-ready” condition is a smart strategy. A smart business owner realizes that having the HR portion of the business “wrapped up and ready to go” makes the business that much easier to sell, and therefore makes the sales transaction much less stressful.
When Selling:
We checked with some business brokers about why they prefer to sell businesses with a PEO handling the HR already.
Nick Rodites, a business valuation, exit planning, and sales and acquisitions specialist, believes “A PEO can enhance the value of a business by (1) reducing the risk of potential employee related liabilities, (2) providing reliable 3rd party documentation on employees, and (3) creating less work and headaches for the incoming owner.
We also spoke with a few tax attorneys in Orlando who work with a lot of business sales.
They implied to us that the due diligence phase can be greatly shortened by good record keeping and an established track record of predictable costs. Having a PEO in place can be a great help with accurate records. Florida Bar rules prevent them from saying anything specific or releasing names, but all advised having an attorney when transacting a business sale (of course!)
When Buying:
There are also reasons to put a PEO in place immediately after you buy a business. Allan Jackson, the owner of Southeastern Data, tells us about his situation.
“I wish I’d known about PEOs when I got started. I could have avoided a lot of headaches in our first year of business associated with managing payroll and taxes, but the real benefit early on would have come from expert help with basic HR issues such as unemployment and workers comp insurance. The time and money that I used to spend on that is now completely focused on the business. It’s been a huge upgrade!
I also can’t say enough about PEO Pros in helping me find the best PEO solution for our needs at every step in my company’s evolution. My best advice for moving to a PEO relationship would be to make PEO Pros your first call.”
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