Client Stories

A Better Way to Give

A client of ours is the founder of several private, family-owned enterprises in the Southeast whose total value is approximately $200 million.  This gentleman is in his early 60s and enjoys being particularly generous to his alma mater. 

 

Some years ago he made a $5 million donation to his university, and he wanted to give more.  However, the idea of merely writing out another large check did not fulfill his want to be truly engaged with the university and to meet specific needs of young people.  In short, our client was looking for a better way to give.

 

We listened and -- working with his financial and legal advisors -- created a charitable trust that enabled a dynamic philanthropic program.  The trust  incorporated contributions of real property, transferred equity, and cash.  The new structure was beneficial in protecting our client's tax exposure and allowed him to make contributions that created much needed scholarships and a state-of-the-art athletic complex named in his honor.   

 

Unsolicited Offer for the Family Business

Since the 1950s, our client, a Florida-based family, has taken great care to grow their retail business from one small shop to more than 13 stores by providing great care for their customers. The family's hard work and sacrifice has built net worth of more than $70 million. 

 

They believed they had solid plans in place and would continue as they always had until an unsolicited offer came in to buy the business.  The family was ready to accept the offer but was unsure if and how compensation for family members actively involved in the business should differ from those not directly in day-to-day operations.  

 

Moreover, with several family members already retired, a sale would have created an unacceptable tax burden. 

 

We began listening to the family's needs and created a strategy and plan to put the sale on hold for 12 months while we began restructuring business and family assets.

 

In the end, Audientis worked with our client to find a new purchaser.   And our client was in a position to accept an offer without the overhang of unacceptable liabilities.  

Preparing For The Next Step

Two business partners, Jim and Fred, had worked together for over 25 years to create a series of successful small business enterprises.  Their business ventures included mining operations, railroad terminal distribution facilities, and a small manufacturing plant.  Most of the businesses were acquired in distress sale circumstances providing Jim and Fred with relatively low basis positions and high potential long term capital gains if the businesses could be sold.  

Jim and Fred had reached the point in their personal lives (both age 60) where they were ready to cash out of their assets and have more time for other activities.  Neither had paid any attention to estate planning.  In fact, one did not even have a will and the other’s will was prepared over 20 years ago.  No buy-sell agreement existed to protect the other in the event of an unexpected death.  Both had very limited life insurance with minimum death benefits.  In addition, both were divorced and currently living with significant others outside of marriage.

Financially, Jim and Fred had strong net worth positions equal to several million dollars each.  However, they had borrowed heavily during the past several years to finance capital improvements to the various properties.  Interest payments were consuming most of the profits creating liquidity stress for both men.

Jim and Fred approached Audientis with immediate need for restructuring of their various debt positions and a strong desire to sell some or all of their assets.  After listening to both men’s objectives and gaining an understanding of their needs, Audientis recommended a personalized plan designed to assist both men in attaining their objectives in the most financially rewarding way possible.

 

The first phase of our work involved design and completion of a series of badly needed housekeeping deliverables needed to remove existing high levels of business risk.  Included in this phase were completion of mutual buy-sell agreements, personal wills, and temporary trusts for their assets.  Next, we facilitated the location and negotiation of a loan consolidation agreement that allowed Jim and Fred to lower overall interest costs and provide additional capital to be able to operate their businesses comfortably during the pursuit of buyers phase.

In addition, we worked with both men to design preliminary estate planning structures needed for potential gifting strategy implementation PRIOR TO selling any of their business assets.  This pre-sale estate planning activity is often overlooked or neglected prior to business sales.  When this occurs, major opportunities for minimizing estate tax exposures can be lost forever.  During this phase, Audientis assisted both men in the selection of appropriate life insurance policies in order to preserve estate values for their children.  We also located qualified appraisers for completion of appropriate valuation appraisals needed for estate planning purposes.

Finally, we prepared detailed business descriptions for all their various businesses and distributed these documents to lists of potential buyers we developed for them.  During the next several months, several interested parties indicated interest in the properties.  Audientis took responsibility for qualification of these prospective buyers, solicitation of offers to purchase, and facilitated final negotiations for eventual sale of the properties.

With the completion of the project, Jim and Fred were successful in liquidation of their assets and more importantly did so within the context of carefully designed financial plans that enabled them to meet individual objectives that included minimization of estate tax exposures and preservation of wealth for future generations.