December 10, 2025 • 8 mins
“Hey Mike, I’ve got a business that I plan to sell in a few years. Any tips on how to prepare for the sale and retirement?”
Discover where you may want to spend your time in order to prepare for a potentially better sale for your business.
Text your questions to 913-363-1234.
Request Your Wealth Analysis by going to www.retireontime.com
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Mike (00:05):
Welcome to how to retire on time, a show that answers
your retirement questions. Saygoodbye to that oversimplified
advice you've heard hundreds oftimes. This show's all about the
nitty gritty. Now that said,remember, it's just a show, not
financial advice. It'seducational.
So do your research. As always,text your questions to (913)
363-1234. Again, (913) 363-1234.Let's dive in. David, what do we
(00:29):
got?
David (00:30):
Hey, Mike. I've got a business that I plan to sell in
a few years. Any tips on how toprepare for the sale and
retirement?
Mike (00:38):
Yeah. Couple of things. First off, keep clean books.
You've gotta have an evaluationof your business for it to be
priced appropriately. So if youreally don't have clean,
accurate, predictable books,you're guessing.
David (00:53):
So if there's, like, big gaps, like, oh, I was really
good at recording everythinghere, but then I goofed off that
year or this month.
Mike (00:59):
Or you oversimplify the expenses. And I've been guilty
of this too. You've got three orfour categories, and everything
goes into three categories. It'sreally hard to figure out what's
going on in the business if youhave oversimplified books or it
not really kept well, and youkind of just, at the end of the
year, just throw it all insomething and call it good.
David (01:18):
Okay.
Mike (01:18):
You wanna have good, high quality, transparent books.
That's the first thing. Alright.The second thing is to make sure
that you're building systems sothat the business is able to
proceed without you. That'simportant.
If your business is in yourbrain and your knowledge, you're
(01:38):
gonna have a hard time sellingit.
David (01:40):
Right. We can't just transfer your brain.
Mike (01:42):
Yeah. The Matrix. We haven't figured out how to, I
don't know, download from TheMatrix or whatever, but but
that's important. Is yourbusiness sellable? It's all
predicated on the idea thatsomeone could buy it, and then
maintain it along the way.
So that's written SOPs, youknow, standard operating
procedures. That's if you canwalk away from it and it still
(02:03):
runs, that's a good sign. Whatare your assets? So you've got
real estate assets that youwanna make sure are accounted
for. What's the value of thereal estate if you own office
space or something like that?
What are the total hard assetsto you? Are you a farm? Do you
have tractors? Do you haveequipment that's gonna be part
of the sale? And then there'sgoodwill as well, and that's
kind of the brand, theintangibles that you might wanna
(02:24):
consider.
So making sure that the businesscan operate without you is huge.
Making sure that you understandthe differences so that when you
sell, you divide up parts of thesale. This is often missed. You
could just sell a business, andyou're paying the gains on the
taxes. And a lot of businessesstarted with sweat equity, so
(02:46):
there's a lot of capital gainson that.
Most people started the businessfrom nothing, so everything has
been taxed as capital gains, oryou could divide it up. So let's
say that the real estate is halfyour business. The office space
is let's just throw a randomnumber. Let's say you've got a
million dollar office spacebuilding that's yours, and
(03:06):
there's other tenants. Great.
And then your business is worth,let's say, a million dollars as
well. So $2,000,000 in totalsale for this simple situation,
you could take and divide up. Soyou've got the real estate and
ten thirty one exchange it intosomething like a Delaware
statutory trust, so that youdon't pay capital gains or
depreciation recapture of thatpart of the sale. That then
(03:30):
moves into a Delaware statutorytrust, which maintains cash
flow, but you've deferred taxesuntil you pass. You just have to
keep doing a ten thirty oneexchange to do DST after DST.
Mhmm. But you're able to defersome of the taxes until you die,
if you hold it until you pass,then there's a step up in basis,
you don't pay those taxes, andyou're maintaining a higher cash
(03:51):
flow. Let's say you're getting4% on the value. Well, you get
more money if you get 4% of amillion dollars as opposed to 4%
of 700,000.
David (04:00):
Okay.
Mike (04:01):
So you only get those tax opportunities if you're selling
the business with differenttransactions.
David (04:09):
Okay.
Mike (04:10):
You don't get the DST, the ten thirty one, if it's all
grouped together. It has to be areal estate transaction for the
real estate exit, where it goesreal estate to a QI, qualified
intermediary, and then it goesinto a DST, or maybe it's seven
twenty one upreach, or whateverthe option is. There's multiple
paths here. But you don't justsell a business in one
(04:30):
transaction, and it works outthat way.
David (04:32):
And so what if you need income? Does the DST pay you a
little bit each year?
Mike (04:36):
Each month. Yeah.
David (04:37):
Okay.
Mike (04:37):
That's quite nice. Or quarterly, depends on how you
structure it. But yeah. Alright.That's kinda nice.
Kinda nice.
David (04:42):
You're controlling the money, so it's in smaller chunks
and
Mike (04:44):
Well, you don't control it. You're paid out, but it's
pretty predictable. Might go upor down based on the rent and
things like that. Sure. But it'sit should be pretty predictable.
David (04:53):
Okay.
Mike (04:54):
That's the idea. And then you've got the other million,
which is goodwill, let's say.Goodwill, great. You get the
best you can. You're gonna paytaxes on that.
Maybe you entertain somethinglike an oil and gas partnership,
which purposely put the money inthere. You suffer all sorts of
losses on purpose to offset thegains, and then you make your
money back. That is a riskystrategy.
David (05:15):
Alright.
Mike (05:16):
But it is an option if you want to talk about tax strategy
on selling the business. Maybeyou don't, you just want to eat
the taxes. It is what it is. Youembrace it, and then you move
forward with a morecomprehensive retirement plan on
how to adjust. Maybe you splitthe difference.
I mean, there's so many thingscould be done, but it all is
based on you setting up so youcan get the maximum amount from
your business, and when you sellit, someone else can step in and
(05:39):
really get the most out of it.And then from there, how do you
separate the sales? Yeah.There's a lot of plan that goes
into this. And you don't wannado it willy nilly.
David (05:48):
Yeah. You don't wanna just take hey. You're bundling
the whole thing up, the realestate and the business in one
package. You just take the2,000,000 in cash, and then
that's a huge tax bill, soundslike.
Mike (05:59):
And not all business brokers know these strategies.
Brokers, their job is to get youa buyer. Uh-huh. They're not tax
professionals.
David (06:08):
Right.
Mike (06:09):
Some of them do their own research and know about the
stuff, some of them don't.
David (06:12):
Okay. They're good at what they do, probably. They can
Mike (06:14):
find the buyer. It's not like you go to the grocery
store, I think I'll buy abusiness today. Not happening.
Brokers make these deals happen.So understanding how to
structure the deal is gonna beimportant.
Understanding the preparation,clean books, operational
systems. The true test is if youcan just walk away today Yeah.
And not do anything, and thebusiness still works, you got a
(06:37):
good business. Danny Kennedy,he's a fun marketer. He doesn't
pull back.
He says what's on his mind, andhe'll often ask business owners.
He'll say, if you walked awaytoday, no more emails, no more
daily anything, no moreproducts, no more selling, like
nothing. You just walked awaytoday and did nothing. Would
your business continue tofunction? If not, you've just
(06:58):
got an expensive hobby.
You don't have a business.You've got an expensive hobby. A
business is supposed to operatewithout you. So if you wanna
sell your business, get it so itcan operate without you. Yes.
Then sell it.
David (07:11):
So yeah. So if you're not there yet, it might take, I
don't know, how much time to getit to that point where you could
walk away and it still worked.
Mike (07:17):
Yeah. And maybe you get a business coach to help you along
with that preparation.
David (07:20):
Yeah.
Mike (07:20):
But those are important factors as you prepare for your
exit.
David (07:25):
Should you have a plan for what next? Hey. I'm I'm
done. I walked away from mybusiness. Now what do I do?
Oh, yeah. Yeah. There's some
Mike (07:31):
big withdrawals that happen for business owners,
because you're always dealingwith the next fire. You're
always dealing with the nextdeal. You're always looking for
the next angle. Uh-huh. Businessowners struggle in retirement,
because they're just so used tohaving a challenge, and being
done with it, it feels good fora little bit, and then you get
(07:51):
stir crazy.
David (07:53):
So Gotta have a plan. Gotta have a plan.
Mike (07:55):
Fill the void with something that's going to give
you purpose. That's all the timewe've got for the show today. If
you enjoyed the show, considersubscribing to it wherever you
get your podcast. Just searchfor how to retire on time.
Discover if your portfolio isbuilt to weather flat market
cycles you're missing taxminimization opportunities that
you may not even know exist.
(08:16):
Explore strategies that may beable to help you lower your
overall risk while potentiallyincreasing your overall growth
and lifestyle flexibility. Thisis not your ordinary financial
analysis. Learn more about YourWealth Analysis and what it
could do for you regardless ofyour age, asset, or target
retirement date. Go towww.yourwealthanalysis.com today
(08:38):
to learn more and get started.
Welcome to how to retire on time, a show that answers
your retirement questions. Saygoodbye to that oversimplified
advice you've heard hundreds oftimes. This show's all about the
nitty gritty. Now that said,remember, it's just a show, not
financial advice. It'seducational.
So do your research. As always,text your questions to (913)
363-1234. Again, (913) 363-1234.Let's dive in. David, what do we
(00:29):
got?
David (00:30):
Hey, Mike. I've got a business that I plan to sell in
a few years. Any tips on how toprepare for the sale and
retirement?
Mike (00:38):
Yeah. Couple of things. First off, keep clean books.
You've gotta have an evaluationof your business for it to be
priced appropriately. So if youreally don't have clean,
accurate, predictable books,you're guessing.
David (00:53):
So if there's, like, big gaps, like, oh, I was really
good at recording everythinghere, but then I goofed off that
year or this month.
Mike (00:59):
Or you oversimplify the expenses. And I've been guilty
of this too. You've got three orfour categories, and everything
goes into three categories. It'sreally hard to figure out what's
going on in the business if youhave oversimplified books or it
not really kept well, and youkind of just, at the end of the
year, just throw it all insomething and call it good.
David (01:18):
Okay.
Mike (01:18):
You wanna have good, high quality, transparent books.
That's the first thing. Alright.The second thing is to make sure
that you're building systems sothat the business is able to
proceed without you. That'simportant.
If your business is in yourbrain and your knowledge, you're
(01:38):
gonna have a hard time sellingit.
David (01:40):
Right. We can't just transfer your brain.
Mike (01:42):
Yeah. The Matrix. We haven't figured out how to, I
don't know, download from TheMatrix or whatever, but but
that's important. Is yourbusiness sellable? It's all
predicated on the idea thatsomeone could buy it, and then
maintain it along the way.
So that's written SOPs, youknow, standard operating
procedures. That's if you canwalk away from it and it still
(02:03):
runs, that's a good sign. Whatare your assets? So you've got
real estate assets that youwanna make sure are accounted
for. What's the value of thereal estate if you own office
space or something like that?
What are the total hard assetsto you? Are you a farm? Do you
have tractors? Do you haveequipment that's gonna be part
of the sale? And then there'sgoodwill as well, and that's
kind of the brand, theintangibles that you might wanna
(02:24):
consider.
So making sure that the businesscan operate without you is huge.
Making sure that you understandthe differences so that when you
sell, you divide up parts of thesale. This is often missed. You
could just sell a business, andyou're paying the gains on the
taxes. And a lot of businessesstarted with sweat equity, so
(02:46):
there's a lot of capital gainson that.
Most people started the businessfrom nothing, so everything has
been taxed as capital gains, oryou could divide it up. So let's
say that the real estate is halfyour business. The office space
is let's just throw a randomnumber. Let's say you've got a
million dollar office spacebuilding that's yours, and
(03:06):
there's other tenants. Great.
And then your business is worth,let's say, a million dollars as
well. So $2,000,000 in totalsale for this simple situation,
you could take and divide up. Soyou've got the real estate and
ten thirty one exchange it intosomething like a Delaware
statutory trust, so that youdon't pay capital gains or
depreciation recapture of thatpart of the sale. That then
(03:30):
moves into a Delaware statutorytrust, which maintains cash
flow, but you've deferred taxesuntil you pass. You just have to
keep doing a ten thirty oneexchange to do DST after DST.
Mhmm. But you're able to defersome of the taxes until you die,
if you hold it until you pass,then there's a step up in basis,
you don't pay those taxes, andyou're maintaining a higher cash
(03:51):
flow. Let's say you're getting4% on the value. Well, you get
more money if you get 4% of amillion dollars as opposed to 4%
of 700,000.
David (04:00):
Okay.
Mike (04:01):
So you only get those tax opportunities if you're selling
the business with differenttransactions.
David (04:09):
Okay.
Mike (04:10):
You don't get the DST, the ten thirty one, if it's all
grouped together. It has to be areal estate transaction for the
real estate exit, where it goesreal estate to a QI, qualified
intermediary, and then it goesinto a DST, or maybe it's seven
twenty one upreach, or whateverthe option is. There's multiple
paths here. But you don't justsell a business in one
(04:30):
transaction, and it works outthat way.
David (04:32):
And so what if you need income? Does the DST pay you a
little bit each year?
Mike (04:36):
Each month. Yeah.
David (04:37):
Okay.
Mike (04:37):
That's quite nice. Or quarterly, depends on how you
structure it. But yeah. Alright.That's kinda nice.
Kinda nice.
David (04:42):
You're controlling the money, so it's in smaller chunks
and
Mike (04:44):
Well, you don't control it. You're paid out, but it's
pretty predictable. Might go upor down based on the rent and
things like that. Sure. But it'sit should be pretty predictable.
David (04:53):
Okay.
Mike (04:54):
That's the idea. And then you've got the other million,
which is goodwill, let's say.Goodwill, great. You get the
best you can. You're gonna paytaxes on that.
Maybe you entertain somethinglike an oil and gas partnership,
which purposely put the money inthere. You suffer all sorts of
losses on purpose to offset thegains, and then you make your
money back. That is a riskystrategy.
David (05:15):
Alright.
Mike (05:16):
But it is an option if you want to talk about tax strategy
on selling the business. Maybeyou don't, you just want to eat
the taxes. It is what it is. Youembrace it, and then you move
forward with a morecomprehensive retirement plan on
how to adjust. Maybe you splitthe difference.
I mean, there's so many thingscould be done, but it all is
based on you setting up so youcan get the maximum amount from
your business, and when you sellit, someone else can step in and
(05:39):
really get the most out of it.And then from there, how do you
separate the sales? Yeah.There's a lot of plan that goes
into this. And you don't wannado it willy nilly.
David (05:48):
Yeah. You don't wanna just take hey. You're bundling
the whole thing up, the realestate and the business in one
package. You just take the2,000,000 in cash, and then
that's a huge tax bill, soundslike.
Mike (05:59):
And not all business brokers know these strategies.
Brokers, their job is to get youa buyer. Uh-huh. They're not tax
professionals.
David (06:08):
Right.
Mike (06:09):
Some of them do their own research and know about the
stuff, some of them don't.
David (06:12):
Okay. They're good at what they do, probably. They can
Mike (06:14):
find the buyer. It's not like you go to the grocery
store, I think I'll buy abusiness today. Not happening.
Brokers make these deals happen.So understanding how to
structure the deal is gonna beimportant.
Understanding the preparation,clean books, operational
systems. The true test is if youcan just walk away today Yeah.
And not do anything, and thebusiness still works, you got a
(06:37):
good business. Danny Kennedy,he's a fun marketer. He doesn't
pull back.
He says what's on his mind, andhe'll often ask business owners.
He'll say, if you walked awaytoday, no more emails, no more
daily anything, no moreproducts, no more selling, like
nothing. You just walked awaytoday and did nothing. Would
your business continue tofunction? If not, you've just
(06:58):
got an expensive hobby.
You don't have a business.You've got an expensive hobby. A
business is supposed to operatewithout you. So if you wanna
sell your business, get it so itcan operate without you. Yes.
Then sell it.
David (07:11):
So yeah. So if you're not there yet, it might take, I
don't know, how much time to getit to that point where you could
walk away and it still worked.
Mike (07:17):
Yeah. And maybe you get a business coach to help you along
with that preparation.
David (07:20):
Yeah.
Mike (07:20):
But those are important factors as you prepare for your
exit.
David (07:25):
Should you have a plan for what next? Hey. I'm I'm
done. I walked away from mybusiness. Now what do I do?
Oh, yeah. Yeah. There's some
Mike (07:31):
big withdrawals that happen for business owners,
because you're always dealingwith the next fire. You're
always dealing with the nextdeal. You're always looking for
the next angle. Uh-huh. Businessowners struggle in retirement,
because they're just so used tohaving a challenge, and being
done with it, it feels good fora little bit, and then you get
(07:51):
stir crazy.
David (07:53):
So Gotta have a plan. Gotta have a plan.
Mike (07:55):
Fill the void with something that's going to give
you purpose. That's all the timewe've got for the show today. If
you enjoyed the show, considersubscribing to it wherever you
get your podcast. Just searchfor how to retire on time.
Discover if your portfolio isbuilt to weather flat market
cycles you're missing taxminimization opportunities that
you may not even know exist.
(08:16):
Explore strategies that may beable to help you lower your
overall risk while potentiallyincreasing your overall growth
and lifestyle flexibility. Thisis not your ordinary financial
analysis. Learn more about YourWealth Analysis and what it
could do for you regardless ofyour age, asset, or target
retirement date. Go towww.yourwealthanalysis.com today
(08:38):
to learn more and get started.
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