Sacramento Business Exit Planning Attorney

Exit Planning Success Stories

  • We represent three (3) shareholders being bought out of their company this year for over $3.6 million. Payments would be received in 2025 and 2026. We recommended the restructure of the sale to an option that closes in 2026. The deal points generally remained the same for the Buyer. The payments received in 2025 are not taxable until 2026 when the option closed. The tax due would not be paid or owed until April 15, 2027. 

    We also recommended a NIMCRUT (Net Income Make-Up Charitable Remainder Unitrust). The shares contributed to the Trust provide an income tax deduction and the sale is not subject to tax. This allows the client to invest the entire portion of the sale proceeds allocable to the Trust without reduction for tax. This type of charitable trust allows for payments to be skipped or retained in Trust under the management of the Client’s financial advisor for increased growth or value. A lump-sum payment is made to the clients half-way through the term to provide increased value or funds to the client. Annuity payments continue for the client for the remainder of the term. 

    With a $450,000 contribution to the NIMCRUT, the actual tax savings for each client was approximately $190,000. Client also received annuity payments of $600,000.

  • We represent two (2) clients who formed a business with an investment of approximately $1.2 million in 2023. The clients were in the process of selling the company through an investment banker for over $600 million. The sale was expected to close within 60 days or so. 

    Those that work with us for tax planning know that we need up to two (2) years or more to implement the best tax minimization strategies. Despite the short time frame, we successfully designed an intermediate structured sale to defer tax for up to 30 years. We were able to also utilize a split interest charitable trust and charitable lead annuity trust to substantially minimize tax on the sale. Before implementation, the sale was put on hold by the investment banker negotiating the sale due to the uncertainty in the market place due to the tariffs being imposed.

  • Family technology/service business operated as an S Corporation to be sold for $7 million. Two (2) specific structures were utilized to minimize tax and build wealth for the Seller and his family (our Clients). First, $2 million of personal goodwill was established for the Client. This was needed because of the ownership restrictions for S Corporation stock. This personal goodwill was contributed to a Split Interest Charitable Trust (the “Trust”) that provided the following two (2) benefits: (1) No capital gain on $2 million for the sale of the goodwill contributed to the Trust. Tax savings: $740,000 and (2) Received an Income Tax deduction of $900,000. This provided an additional tax benefit of $272,000. Total tax savings is $1,012,700. Client and Client’s wife receive income from the Charitable Trust for life providing an ongoing source of retirement income. Second, Client utilized a Structured Installment Sale for stock with a value of $3 million, which defers tax on the capital gain in the amount of $990,000 for 30 years. This provides an ability to invest more funds for retirement income that would otherwise be used to pay federal and state income taxes in the year of sale.

  • Clients own a Distribution and Manufacturing Business operating as an S Corporation. That business is worth $2.7 million. Clients also own a commercial building which is worth approximately $2.7 million in which the business operates. Clients seek to retire and transition business and the building to their son. He has been working in the business for may years.

    The Business: The S Corporation stock was transferred to their son by means of a Qualified Subchapter S Trust (“QSST”) that included upstream basis provisions. When either client dies, son will receive a basis step-up to the fair market value at the date of death in the shares of the S Corporation. Another basis step-up is received when the surviving Client dies. This means that the business could be sold then for no capital gain tax.

    The Building: The building will be transferred to the son utilizing a structure that prevents the reassessment of property tax at transfer or upon the Client’s death. The property tax will not be reassessed for the son’s entire life. This provides a significantly higher return on investment from the building. The
    building will be held in an LLC which is held by the upstream basis trust described above. Client will receive a basis step-up upon the death of each of the Clients. This means that the building could be sold after those deaths with little if any reassessment. If the building is not sold, then the son’s basis will be increased to the fair market value at the date of death. This provides for higher depreciation deduction which also increases the return on investment from the building.

Strategic Business Exit Planning: A Guide to Maximizing Value and Securing Your Future

An exit plan is the most significant financial event of a business owner's life. It's a proactive, strategic process designed to help you transition out of your company while maximizing its value and securing your financial future. This comprehensive approach goes beyond simply finding a buyer; it involves a meticulous preparation to ensure a smooth and profitable handover.

By creating a well-structured exit plan, you can address critical elements like business valuation, tax strategies, and succession planning long before you're ready to sell. This preparation makes your business more attractive to potential buyers, whether they are:

  • Family members: A well-planned transfer avoids conflict and ensures your legacy continues.

  • Employees: An Employee Stock Ownership Plan (ESOP) or other internal buyout can reward your team and maintain business stability.

  • Third-party buyers: Strategic preparation can attract a wider range of qualified buyers and lead to a more favorable deal.

Our firm focuses on helping business owners navigate the complexities of this transition by:

  • Assessing your goals: Defining your personal and financial objectives for the exit.

  • Optimizing your business: Identifying areas for improvement to increase its value.

  • Developing a custom strategy: Tailoring a plan to your specific situation, minimizing tax liability, and maximizing your return.

  • Navigating legal and tax considerations: Ensuring a smooth legal transfer and a tax-efficient sale.

  • Negotiating favorable terms: Securing the best possible deal for you.

Proactive exit planning provides invaluable peace of mind, allowing you to focus on the present while building a path toward a secure and rewarding future.

Why Choose John Goralka for Your Business Exit?

  • An exit plan is the most significant financial event of a business owner's life. It requires a rare combination of legal, tax, and business knowledge to maximize your financial return and protect your legacy. John Goralka's unique qualifications make him an exceptional choice to guide you through this complex transition.

    What sets John Goralka apart is his dual specialization in both Taxation and Estate Planning, Trusts, and Probate, certified by the State Bar of California. Fewer than 100 attorneys in the entire state hold this combination of credentials. This means your exit strategy isn't just about the sale; it's a comprehensive plan that also addresses:

    • Income Tax Minimization: Structuring the sale to reduce your tax liability.

    • Wealth Transfer: Efficiently passing on your wealth to the next generation.

    • Estate & Legacy Preservation: Ensuring your business and family values endure.

    With a background as a former income tax auditor and hearing officer for the California Franchise Tax Board, John offers a rare, inside perspective on tax regulations. This experience is invaluable for proactive tax planning and can be a significant advantage in any dispute.

    At The Goralka Law Firm, we don't just draft documents; we partner with you to develop a strategic roadmap that aligns with your personal and financial goals. We work with your other trusted advisors, such as your CPA and financial planner, to create a unified, tax-efficient, and customized plan. Whether your goal is a tax-advantaged sale to a third party, a seamless family succession, or a rewarding employee buyout, we have the specialized expertise to protect your interests and optimize your outcome.

The Proven Benefits of Strategic Business Exit Planning

Proactive exit planning is more than a legal formality; it's a strategic investment in your future. By taking control of this process, you gain a significant competitive advantage and unlock a range of tangible benefits that protect your business and secure your financial well-being.

  • Maximize Your Financial Return Strategic planning and preparation can significantly increase the value of your business, possilby leading to a higher sale price and a more substantial financial return. We help you identify and optimize key value drivers, from operational efficiency to a strong management team, so your company is positioned for optimized profitability.
  • Ensure a Seamless Transition A well-structured exit plan minimizes disruption to your business, employees, and customers. By addressing legal, financial, and operational details in advance, we create a clear roadmap for the handover, maintaining business stability and preserving the company’s reputation during the transition.
  • Protect and Honor Your Legacy Your business is more than just an asset; it's the culmination of years of hard work and vision. Strategic exit planning allows you to choose the right path for your company's future, whether that involves a transition to a family member, an internal buyout by a trusted employee, or a sale to a third party that aligns with your values.
  • Secure Your Financial Future An exit plan is the cornerstone of your personal financial security after the sale. We work to implement tax-efficient strategies that minimize your tax burden on the transaction, ensuring you retain more of the wealth you’ve built.
  • Achieve Peace of Mind The unknown can be a source of stress. By creating a clear, actionable plan for your exit, you gain a sense of control and confidence about your future. This allows you to focus on running your business today, knowing that your most significant financial event is already charted for success.

Building a Secure Future Together

Clarifying your next steps reduces uncertainty and brings peace of mind. Don't leave your exit planning to chance. Contact Goralka Law Firm today or call us at 916-440-8036 to schedule a consultation and start crafting a successful exit plan that meets your unique needs. We'll be your trusted advisor throughout the process, guiding you towards a prosperous and well-deserved future.

Interested in Learning More to Secure Your Family's Future? 

Read my detailed articles at the Kiplinger Advisor Collective, an exclusive professional organization for advisors, managers, and executives in personal finance.