BU SI NESS SUCCESSION PLANNIN G A Business Owner s Introduction

BU SI NESS SUCCESSION PLANNIN G A Business Owner s Introduction

TABLE OF CONTENTS ASSESSING THE SITUATION........... 3 UNEXPECTED SUCCESSION PLANNING... 3 VOLUNTARILY EXITING A BUSINESS.... 4-5 Selling the Business Outright Winding Up the Business Gifting/Inheritance x Retirement Spending Needs x Business Management x Control x Taxes Selling to an Interested Party................ 5-6 x Outright Sale x Sale to an Employee Stock Ownership Plan (ESOP) Special Valuation Opportunities............... 7-8 x Minority Interest x Lack of Marketability x Lack of Control Estate Freeze Techniques................. 8-10 x GRATs x Utilizing an Intentionally Defective Trust BRINGING IT ALL TOGETHER........... 11 Important Disclosures..................... 12 2 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

If you ask any business succession expert, or any business owner that s gone through it, the best advice a business owner may get is to plan for exiting a business at the same time you start one. In the real world, that doesn t happen too often. Many business owners start their business on a wing and a prayer just hoping to make it. Thinking about how to exit a successful business, while always the goal, is rarely the priority in the beginning. Whether you re contemplating starting or buying a business, or if you re a current business owner, you should consider reviewing and/or implementing your business succession plan. There are several issues to address and techniques to consider depending on your goals. For purposes here, business succession is defined as the voluntary or involuntary exit from a closely held business. While an outright sale of the business to a third party is always a viable exit strategy, the focus here will be transfers to family or key employees. ASSESS T HE SITUATION The first step in creating or reviewing a business succession plan is to assess the situation. What planning techniques have been implemented? Is there a buy/sell agreement with the business partners? How is it funded? Does the incorporating document for the business have provisions in it regarding business succession? Many incorporating documents have either specific or boilerplate language regarding these issues that may or may not align with the business owner s goals. The next step is to identify the business owner s goal for both near term and long term concerns. Is there a plan in place if something happens to the business owner unexpectedly? Does the business owner want to give the business away? Does the business owner want to sell the business to family members, the next generation, key employees, or to a group of employees (such as an Employee Stock Ownership Plan to be discussed below)? Is it a mix of these options? Establishing what the ideal outcome may be for the business owner helps guide what succession planning techniques may be applicable. Of course, there will be trade-offs to consider as the plan is implemented. Another part of the assessment is whether there are other coowners or key partners/employees that must be consulted when establishing business succession goals. If there are business partners, how does someone s exit affect the business? Are there documented agreements in place to address these concerns? Are each business owners goals aligned with their co-owners? If family is considered part of the succession plan, will the other owners and key employees be willing to work with the family? There are many moving parts to a succession plan. Once the current situation is understood, and goals have been established, there are two primary exit events to address; the unexpected succession plan and the planned exit. UNEXPECTED SUCCESSION PLANNING Unexpected succession planning can come in the form of the business owner or key personnel in the business quitting, dying, becoming incapacitated, etc. Regardless of the cause, losing such a person unexpectedly could devastate the value or operating systems of the business. In the case of a death, the deceased owner s family may be without their primary source of income, could be thrust into owning/managing a business unfamiliar to them, or could be left with a hefty estate tax liability without enough liquid assets available to pay the tax.

With proper planning, though, business owners can address their specific concerns. Just a few of the several common techniques available to prepare for unexpected succession planning needs are: Buy/Sell Agreements: Buy/Sell agreements are common among multiple owner businesses. In their simplest form, a buy/sell agreement is a contractual obligation for the owner that exits the business (or the owner s estate) to sell their ownership either to the other owners (often called a cross sell agreement) or back to the business (often called a redemption agreement). The sales price is usually an agreed upon formula designed to represent the fair market value of the exiting owner s share. Many times life insurance is used to fund buy/sell agreements as they are usually used for protection should the business owner die unexpectedly. Key Person Planning: Sometimes the unexpected loss of a nonowner key employee can be as devastating as the unexpected loss of a business owner. Many businesses have key employees in management, relationship or operational roles that simply cannot be readily replaced if the employee left unexpectedly. Those unexpected departures can be for a new job, due to incapacity or even death. Because this type of planning is often done in contemplation of incapacity or an unexpected death, insurance, known as key person insurance, is often utilized. A vesting key person insurance policy allows the proceeds to bridge the gap from the loss of the key person until a solution can be found. Funds become available to recruit and/or train a suitable replacement. If a cash value life insurance policy is utilized but eventually not needed, the policy could become an informal funding vehicle for a non-qualified deferred compensation plan for the key individual. Proper planning for the unexpected succession problem addresses many issues. For business owners, their financial interest in the business can be protected from an unexpected occurrence. For the business owner s family, liquidity concerns and asset preservation issues can be addressed. For the business in general, and its employees, the ability for the business to continue as a going concern can protect everyone s reliance upon the operating business and subsequent cash flows. In short, proper planning for an unexpected event benefits everyone related to the business. VOLUNTARILY EXITING A BUSINESS Assuming things go well, the more exciting and fulfilling way to exit a business is voluntarily. Some of the most common voluntary exit techniques are: Sell the business outright to an outside party not already related to the business Wind up the business and terminate operations Give the business during life or as an inheritance to family or key employees A sale of the business to family, partners, employees, etc. A hybrid of any of these methods Selling the Business Outright A very common and sometimes very lucrative succession plan involves selling the business to an outside party. The buyer can be someone looking to get into the business or a strategic buyer wanting to take advantage of the business s particular area of expertise. At Benjamin F. Edwards we may be able to help a business owner find an outside buyer. Ask your Financial Advisor about our investment banking opportunities if you are interested. However, selling to an outside person, while perfectly acceptable, is not the focus of this document. Winding Up the Business Some businesses either can t continue, or have no interest in continuing, once the business owner is ready to end the business. Simply wrapping up and closing a business is always an option, but again, not the focus of this discussion. Gifting/Inheritance Many business owners simply would like to give their business over to their family or to some key employees. These gifts may be something contemplated while the business owner is still alive, or perhaps as an inheritance technique. When contemplating these gifting techniques, though, the business owner needs to consider several factors. 4 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

Retirement Spending Needs If the business owner gifts away some or all of the business while they are alive, the business owner also gives away the income stream related to the gifted ownership. Before making gifts, the business owner must be sure that they can comfortably meet their personal retirement needs after completing such a gift. Business Management Often the business owner is also a key manager for business operations. Will the business be able to efficiently carry on if the business owner is no longer around? Can the succeeding management/business owner maintain the business as an ongoing concern? Are there any personal links with the exiting business owner such as key relationships with customers, suppliers, bank lines of credit, etc.? The potential of all of these factors to change after the business owner exits must be considered. Control Is the exiting business owner giving up complete control of the business, or just the equity in the business? It is possible in many organizations that the ownership structure can be split so that there are the voting shares of the business and the equity shares of the business. Whether these types of split shares are possible will depend on the type of business entity and other factors. If an equity/control split is possible, however, such splits can solve many issues. For example, if a business owner is ready to pass the management reins, but needs to maintain an income stream from the business to meet retirement spending goals, the business owner can gift voting shares and retain equity shares. Thus, the new owners will control the business but continue to pay the income stream for the retiring owner for some time. The opposite is also possible if the owner desires to gift equity but retain control of the ongoing business decisions. Of course there are risks to this plan. If the retiring business owner is reliant upon the income stream, but the new management fails at operating the business, the income stream could be lost. On the other hand, new management may not wish to simply pack the coffers of the retired partner while they operate the business. Making sure all sides can live with the balancing act of these factors is key to a successful transition. Taxes There are multiple tax considerations when making gifts of any type, including business ownership. First, when one makes a gift during life they also gift their tax basis to the recipient. Consequently, assuming the original owner has a low cost basis, the new owners may be constrained with future tax consequences if they later decided to sell their interests. Estate and Gift Tax - 2016-2018 Year Annual Exclusion Maximum Tax Rate Estate & Gift Tax Exemption 2016 $14,000 40% $5,450,000 2017 $14,000 40% $5,490,000 2018 $15,000 40% $11,180,000 Next, there are possible federal gift tax consequences to transferring the business. Federal law currently allows individuals to gift during life up to $15,000 per person per year ($30,000 if married). Any gifts in excess of this annual exclusion amount causes the gifting individual to use their lifetime federal estate and gift tax exclusion amount, which is $11.18 million in 2018. There may also be state specific estate and gift tax consequences as well. The fact that the exclusion may be used for giving is not prohibitive, but it is a factor for each specific individual situation to consider. If one waits to pass the business at death, there typically will be a stepup in basis for the assets inside the business owner s estate, including the business. Estate taxes may be due if the estate is greater than the applicable exclusion in the year of death, which could also include state estate taxes. If the business is a large asset of the estate, getting the taxes paid could cause issues. Generally estate taxes are due nine months from the date of death. Business owners may want to look at liquidity options such as life insurance or buy/sell agreements to help with potential estate taxes. Selling to an Interested Party If gifting isn t a goal, or if the exiting business owner needs to monetize some or all of the business to meet retirement spending goals, selling the business to family and/or key employees can be considered. Regardless of the financial issues some owners may want to sell the business to successors just so the successors have some skin in the game with their new ownership. Whatever the motivation, there are multiple considerations when selling to an interested party. 5 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

Outright Sale Whether it is a portion of ownership or the whole thing, a simple technique would be for the existing owner to sell their interests to the interested party. For such a sale not to be considered a gift for federal gift tax purposes, the sale must be for fair and adequate consideration. This is where the balancing act can begin. If the selling owner discounts the price to a point that the transaction doesn t appear to be for fair and adequate consideration the IRS can deem the transaction a gift for gift tax purposes and cause potential gift tax liability on the selling owner. While rarer, the opposite can also be true if the selling owner receives an excessive premium for the sale of the business. In that situation, the buyers could be deemed to be making taxable gifts to the seller. Assuming the sale is for fair and adequate consideration, and assuming there are taxable gains on the sale, there are some structuring opportunities available. For example, if the selling owner doesn t want to take the tax hit for the entire sale in one year, an installment sale may be appropriate. In an installment sale the shares are sold over a multi-year plan (one-third each year for three years for example). The seller can then elect to pay any Keeping it in the Family If you own a family business and you re hoping to transfer that business to the next generation, the odds are against you. According to the Family Business Institute only 30% of family businesses survive into the second generation, only 12% are viable into the third generation, and only about 3% of all family businesses operate into a fourth generation or beyond. The biggest mistake with those businesses is the lack of a viable and well thought out succession plan. income tax consequences (typically capital gain) in the year in which they receive payment for the sale, therefore spreading the tax liability over three years in this example. As discussed with gifting above, and assuming the business can be structured in such a way, the selling owner can split the business into voting shares and equity shares. The owner can then sell only the particular shares they wish. Such techniques may help with ongoing management and operational transitions. Sale to an Employee Stock Ownership Plan ( ESOP ) Outright sales may not be practical or desired in some situations. If an owner desires the company s employees own the business utilizing an ESOP may be possible. Generally speaking, an ESOP is a qualified plan designed to invest mostly in the stock of the employer. In a sense, the ESOP is really like a profit sharing plan for the employees. ESOPs have certain unique benefits, like the ability to borrow money to purchase the employer stock from shareholders. As such, the ESOP allows the selling owner to immediately exit the business and the employees to buy in over time. 6 ]

ESOPs are not a universal solution. There are some key factors one must consider: C or S Corp The company must be a corporation (either C or S corporation) with stock shares. Limited liability companies, limited partnerships, etc., do not qualify as they do not have stock. If the business is an appropriate ESOP candidate it can be an excellent mechanism for a departing owner to sell shares to the company employees. Employee ownership is known to raise company moral, production and enthusiasm. Moreover, some ESOP structures may provide tax management opportunities for the parties involved. The details for an ESOP are company specific, and business owners should consult with their tax and legal professionals, along with their financial advisors, to determine whether an ESOP is an appropriate solution for their business succession plan. Company Size & Health The company must be of an appropriate size due to the cost and complexity of an ESOP transaction. Usually companies valued in excess of $5 million are candidates for ESOPs. The company needs to be healthy and have reasonable prospects for continued earnings and growth. In other words, the business must have earnings and a value to justify the sales price. An ESOP is a long term investment for the employees and the company needs to have long term value to justify the transaction. Special Valuation Opportunities For either gifting or sales situations there may be special valuations available to further the cause of the exiting business owner. This is usually in the form of valuation discounts, though other techniques may be available. Recall that whenever the ownership interest is transferred, and regardless of whether it is a gift or a sale, the fair market value of the asset is what is transferred. Often times for both gifts and sales to interested individuals, the selling owner would prefer a lower fair market value determination so that the cost of the gift, or the amount of consideration paid by an interested buyer, can be limited. Access to Cash Because most ESOP plans involve the immediate purchase by the plan of company stock from the existing owners, the ESOP needs to have access to cash. Often ESOPs borrow the funds necessary to fund the initial transaction, which means the company itself must be able to not only secure the loan, but also have sufficient earnings, profits and contributions to repay the debt. The IRS standard for valuing the transfer of any asset is the willing buyer/willing seller test. In other words, what price would a willing buyer pay for the asset and what price would a willing seller accept to execute the transaction? That determination is used to establish the value of a gift for gift tax purposes and/or to validate the value for a sale. For publicly traded securities, the willing buyer/willing seller test is valued by the stock exchanges. With a closely held business, generally there is no public market so determining fair market value can be difficult. Participation The exiting business owner must have a desire for the employees to gain a significant ownership in the business. While all employees do not have to participate in an ESOP, to satisfy IRS nondiscriminatory guidelines the ESOP must cover a substantial percentage of non-highly compensated employees. As such, most ESOPs cover all eligible employees. With this in mind there are several techniques utilized to try and discount the value of a business for transfer purposes. Consider the following example: Let s assume a closely held business is valued at $1.6 million for book purposes. Let s also assume that the business owner wants to gift one percent of the business, or, for book purposes, $16,000. Should the owner do this without any valuation discounts the owner would face a $1,000 taxable gift requiring the filing of a federal gift tax return ($15,000 annual exclusion accounting for the rest of the gift tax consequence). Let s also assume the business owner wants to avoid the $1,000 taxable gift. 7 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

Minority Interest One position to take is that a one percent interest in a closely held business isn t worth exactly one percent of the book value. The one percent holder has a minority interest, consequently having very little say in the business operations, and could therefore arguably have difficulty trying to sell their one percent interest to a willing buyer for $16,000. The business owner could argue that the gift is worth less than $16,000, perhaps $13,000, due to these limitations. This technique allows the business owner to apply a minority interest discount to the transfer. Lack of Marketability Under the same example, let s assume the business has a provision in its corporate records that requires any shareholder wanting to transfer an interest in the business must first provide other shareholders a first right of refusal to buy the shares. The one percent shareholder may have difficulty finding a willing buyer to offer book value for a share that will have to pass through the right of first refusal. Consequently, the argument is that restraints on the marketability of the shares mean a discounted value of less than $16,000. Lack of Control Lack of control can also be offered as a discountable condition as well. This can come from the mere fact that a one percent owner has no control in a business when someone else owns ninety-nine percent of the business. This can also come if the share that is gifted is a nonvoting share compared to the original owner retaining all or a majority of voting shares. Again, the willing buyer test may justify a discount in the value of the asset transferred due to a lack of control. Estate Freeze Techniques For business owners desiring to transfer ownership that may face a taxable estate ($11.18 million in 2018), there are several techniques designed to lock in or freeze the value of the business for transfer tax purposes. Two common techniques are Grantor Retained Annuity Trusts ( GRATs ) and sales to an Intentionally Defective Grantor Trust ( IDGT ). GRATs A GRAT is a federally recognized trust arrangement where the grantor/ creator of the trust (for our purposes, the business owner) moves assets to the trust. The trust provides that the grantor business owner retains an annuity payment back from the trust of some identified value for a term of years (two, four, ten years, whatever is decided). At the end of the trust term, after the full annuity payments have been made to the grantor business owner, any remaining assets in the GRAT pass to the trust beneficiaries (for our purposes the family member or valued employee). To understand why a GRAT can be a useful succession planning technique, one must understand the math of a GRAT. At the time a GRAT is created you must calculate the present value of the future annuity payments for the grantor and the present value of the remainder assets when the trust ends. This calculation is determined by a formula based on a government provided rate of return, called the 7520 rate. Utilizing the calculation, any remainder value expected to pass to the trust beneficiaries is considered a taxable gift. This gift does not qualify for the annual exclusion because it is a gift of a future interest. These are simplified examples of some common discounting techniques. Business owners often employ more than one of the discounting techniques to seek a sizable discounted valuation. Properly structured, one could argue a discount for minority interest, lack of marketability and lack of control for our example. Of course the IRS typically takes an opposing position. Thus, many discounting situations involve valuation experts employed by both sides to justify their valuation. That said, there are many cases where owners have successfully obtained 10%, 30% or even in excess of 50% valuation discounts for transfers. These discounts are situation specific, and often are met with significant IRS resistance. Business owners considering discounted transfers would need to work with their tax and legal advisors to help determine, document and defend a discounted value. Let s consider an example. If the grantor put $100,000 worth of company shares into the business and retained an annuity stream that has a present value of $90,000, this calculation leaves us with $10,000 remaining for the GRAT beneficiary. Consequently, the grantor will have made a $10,000 gift and will have to pay gift tax (or apply the lifetime exclusion amount, currently $11.18 million) on a properly filed federal gift tax return (Form 709) when creating this GRAT. With this math in mind it is easier to understand the value of a GRAT. Using our example above, let s assume the company shares appreciated greater than the original estimates and instead of $10,000 in the trust when it ends there is $30,000. Since any tax was calculated and paid at the beginning of the GRAT term, the trust beneficiaries receive $30,000 worth of shares for only a $10,000 gift tax consequence 8 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

Assets remaining after annuity payments pass to beneficiaries Grantor GRAT Ultimate Beneficiary Creates the trust Transfers assets to the trust Makes Annuity payments back to the Grantor for term of years Receives remaining trust proceeds at end of GRAT term in this example. In essence, the grantor has frozen the value of the gift for gift tax purposes at $10,000, and any growth in excess can pass gift tax-free. If the GRAT performs worse than expected, the opposite is true. Assume at the end of the GRAT only $5,000 remained. In that example the grantor paid $10,000 in tax consequence only to actually transfer $5,000. Consequently, assets that are expected to grow significantly in value and/or assets that generate a lot of income are prime candidates for GRAT planning. Because these are moving targets many practitioners create several GRATs that mature over time, sometimes referred to as rolling GRAT plan. For example, they may create one GRAT lasting 10 years, another with an 8 year term, then others with 6, 4, and 2 year terms. This allows each GRAT to be rolling so when years of high growth occur and the opportunity to transfer that growth per the GRAT plan materializes, there is always a GRAT vesting to the beneficiaries. It also helps hedge the risk if assets underperform. Some practitioners work the numbers for the annuity payment so that when you use the government s calculations you have a zero remainder for the trust beneficiaries. These are known as zeroed out GRATs. The calculation is more complex than this example, but let s say we re funding a $100,000 GRAT, with an assumed 2.5% rate of return, and the annuity payments are $52,500/year for two years. This could roughly end up with a $100,000 present value for the grantor and a $0 present value for the remainder. Consequently, there is no taxable gift for creating such a trust. But if there are any dollars left over because the trust outperforms the expected rate of return, such assets would pass transfer tax-free to the trust beneficiaries. GRATs are not without risk. First, if the grantor dies during the GRAT term, the entire value of the GRAT is pulled back into the grantor s estate for estate tax purposes, thus thwarting any potential transfer tax advantage. For the zeroed out GRAT, many proponents say that there is no risk because if the shares don t appreciate, you end up back where you started. However, there are administrative and legal costs to create and maintain these trusts, constituting an expense beyond the transfer tax concerns. Lastly, the federal government recognizes that the rolling GRAT technique can potentially limit transfer taxes. The government also strictly scrutinizes zeroed out GRATs. As such, some members of 9 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

In a typical IDGT the grantor creates the trust for the benefit of their selected beneficiaries. The grantor cannot benefit from the trust, cannot be the trustee, and the trust must be irrevocable once created. With these provisions, the trust is designed to be out of the estate of the grantor. Then there is the intentionally defective aspect of the trust. In an IDGT the grantor typically retains a right pursuant to the IRS tax code, usually an administrative right via IRS code section 675, which causes the income tax liability of the trust to be a liability of the grantor. In other words, the trust earns and retains the income, but the grantor pays the income tax for that income out of their own pocket. That payment of tax is not a gift to the trust or any of the beneficiaries; rather it is simply a tax liability the grantor must pay. Congress and President Obama have proposed a minimum ten year term for GRATs and proposed to eliminate zeroed out GRATs. Should this occur, having a longer term would mean a rolling GRAT technique would have greater risk of failing should the grantor die during the GRAT term. Eliminating the zeroed out GRAT would mean every GRAT would have a transfer tax consequence. GRATs can be considered as a potential gifting and estate freeze technique, but the GRAT s success may only work in appropriate specific situations. Business owners should confer with their tax and legal advisors before considering whether a GRAT is appropriate. Using an IDGT for business succession purposes is typically done by business owners with a high likelihood of facing an estate tax, and that have enough net worth to pay the income tax liabilities on the trust assets. Businesses with high growth potential and/or businesses that generate a lot of income are good candidates for an IDGT. In this scenario the business owner would create the trust for the benefit of the successor business owners. When successful, an IDGT allows the assets inside of the trust to grow outside of the grantor business owner s estate, and allows the grantor business owner to lower their personal estate value by paying the income tax liability on the IDGT. The beneficiaries of the trust can then receive the income from the trust tax-free in that the grantor will have paid the tax liability. While the business owner can gift shares of the business to an IDGT, a more common approach is a sale of assets to an IDGT. This sale needs to be an arm s length transaction, otherwise the IRS could argue the transfer is really a gift for gift tax purposes. For this, some general guidelines are often followed by the parties creating the transaction. First, the sales price must be adequate. As discussed above, the price must pass the willing buyer/willing seller test. Utilizing an Intentionally Defective Trust Another estate freeze technique for business owners is to sell business shares to an Intentionally Defective Grantor Trust ( IDGT ). An IDGT is a special trust designed to keep the assets held in that trust outside of the grantor business owner s estate for estate tax purposes, but designed to require the income tax owed for assets held by the trust to be paid by the grantor. Next, the trust needs to be a viable purchaser. In other words, the trust needs to have enough assets to evidence a down payment. Most practitioners recommend at least 10% of the transaction costs. For example, if you are selling a $1 million share of the business, the trust needs to own at least $100,000 of assets before the sale. The logic behind this is that trust needs to be a viable entity. An arm s length transaction typically would not be accepted for a $1 million share if the buyer has no known assets. In many transactions, the $100,000 is gifted to the trust well before a sale takes place. 10 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

In the transaction the grantor business owner usually takes back a promissory note from the trust for the payments due on the sale. Again, this note must be at a reasonable interest rate and contain reasonable terms for the transaction. Having terms too favorable could cause the technique to fail. If the IDGT sale works it allows the business owner to freeze the value of the assets sold to the IDGT for estate tax purposes. After the transaction the grantor business owner has removed the business shares from their estate in exchange for a fixed value promissory note. Should the business highly appreciate and/or generate lots of income, it happens outside of the selling business owner s estate and inside the trust. For the selling business owner, they simply hold the promissory note in their estate at its predictable value. It is also possible to apply discounting to the assets sold to the trust, as discussed above, to further leverage the transaction. Lastly, as the selling business owner continues to pay the income tax liability for the trust they continue to lower the value of their estate by these obligations. IDGTs are complex to create and administer. They typically involve large taxable estates and require ongoing management and oversight. They can also be a very effective estate planning strategy. Work with your tax and legal professionals to weigh whether this technique can meet your succession planning and estate planning goals. BRINGING IT ALL TOGETHER None of these sales or gifting techniques are stand-alone features, nor is this brief list of techniques exclusive to the many succession planning methods available. It may be that an owner does some gifting of shares partnered with an outright sale, ESOP, sale to a defective trust, etc. Depending on the method used and the asset transferred, discounting may also be available. In short, there are multiple creative ways to address business succession planning. If you own a business, consider working with your Benjamin F. Edwards Financial Advisor, in partnership with your tax and legal advisors, to determine whether business succession planning is appropriate for you. At Edwards we can help with planning strategies, we have investment banking opportunities should a sale be considered, and of course we have many financial products available to assist with your chosen solution. Review your plan to see if everything is in order, or if you don t have a plan, consider implementing a plan that is right for you. You ve worked hard to create the business; work just as hard to make sure it survives for years to come. 11 ] BUSINESS SUCCESSION PLANNING A BUSINESS OWNER S INTRODUCTION

Important Disclosures The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards & Co. is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional. One North Brentwood Boulevard Suite 850 St. Louis, Missouri 63105 314-726-1600 benjaminfedwards.com 2017-1135 Exp. 7/31/2019 Member SIPC