Gabrielle, along with her business partner Ian, had been running a successful small business for many years when we first met. The business was doing okay but was very reliant on the two main directors and business owners being involved on an ongoing daily basis. The business was in no way “self-managing”; it was not paying the owners sufficiently well enough, and there was conflict over the long-term exit strategy of the owners.  

 

Barriers and barriers

Gabrielle was keen to retire and make the most of her extended family, while Ian, who had a much younger family, wanted to continue in the business for a much longer timescale. In fact, Ian felt he was tied to the business financially, or so he thought, for many years to come. He, too, was terrified at the thought of Gabrielle leaving the business and, truth be told, he kept putting barriers in the way of this happening. 

A little unusual perhaps, but as a firm, we not only acted for the business but both business owners and their respective personal life partners too, although the relationship developed at a different pace for each. 

Working closely with their accountant, our initial planning work was all about assisting with the exit plan and building sufficient resources to ensure that lifestyles could be maintained in retirement. Wealth accumulation was the key; retirement was always on the agenda, but several years hence. 

 

Trapped by loyalty

As the years went by, so did several attempts at a business exit. For one reason or another, the employee buy-outs, third-party buy-outs and even expansion plans failed to fully materialise.  This left Gabrielle frustrated and under a lot of stress; she was not living the life she wanted to live. She felt trapped and yet had a huge loyalty to the business and both her business and life partners. She was again in conflict. 

Despite working with the business and the owners for many years, we had to work very hard to help both understand what was really important to them and how some things in life are far more important than money. Gaining clarity over this was a key step. 

Having identified what it was that Gabrielle truly wanted – to travel, to spend more time with the grandchildren and the removal of stress from her life – we then set about running the numbers to see how this could be achieved. At the same time, of course, we had to do a similar exercise for Gabrielle’s business partner in order to get his buy-in and to make sure that it worked for all concerned.  

We helped everyone gain clarity over what they wanted and, in doing so, we concluded that Gabrielle had accumulated enough. In fact, in conjunction with her life partner, who had already retired, they had more than enough to do all they wanted to do.  

 

No need to sell

She did not need to sell the business for a big number to live the life she wanted to; in fact, the business sale was almost irrelevant to their financial future. This meant that she could approach the exit plan from a totally different perspective; it was no longer about achieving a big number, it was about structuring a deal that would allow her to gradually exit the business while allowing her business partner to continue.  

In the end, again in conjunction with the accountants, we were able to structure an arrangement whereby Ian, with us assisting with the funding methodology and process, was able to buy Gabrielle out of the business for a relatively modest sum, while Gabrielle phased her exit over a couple of years.   

Ian now has 100% of the business and can continue to accumulate his wealth ready for his own retirement in a couple of years’ time while Gabrielle is now enjoying lots of travel and time with her grandchildren. She has a lot less stress in her life now.  

Takeaway

It may seem counter-intuitive, but very often true financial planning is not about the money. Of course, money is important, and without it, some lifestyles are impossible to maintain – but gaining clarity over what is truly important to you can often help with life’s big and small decisions.