World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

Reviewing Your Business Strategy in 2012


In 2012, the consensus is that we may not be seeing a light at the end of the tunnel, but there is a sunrise on the horizon.   With an average of 140,000 jobs being created each month and most economic indicators showing positives, this year should be better than last.  Too often business people wait until late in the year to do their planning.  While there are some actions that can be taken at that point, those who work proactively throughout the year implementing business and tax strategies perform far better than those who put planning off to the last minute.  There is plenty of business and tax planning that should be attended to throughout the year.

Business Operations

According to the National Bureau of Economic Research (NBER) and most economists, the economy is now in a stable recovery.  Given that, businesses should work hard to increase revenue and look to hire additional staff.  Lately, the trend has been that American businesses hire temporary staff ahead full-time employees.  Business will continue to build and stabilize; it is therefore the appropriate time


Instinctively, businesses tend to cut investments as well when business is slow.  Ordinarily, this response to the stimuli would be appropriate. However, given increased Internal Revenue Code Section 179 expense deductions and manufacturer’s incentives to purchase more investments like trucks, equipment, and even buildings, the tax rules and deductions remaining from the past economic down turn have had the lingering effect of being an excellent time to increase investments in business property.  This is especially true if the investments will create more efficiency in operations.  The superior financing and tax incentives during the economic downturn, and now subsequent recovery, outweigh any perceived benefit created by saving money and cutting back on needed investments.  Further, if you do not reinvest now, you may have to reinvest later, when the tax and manufacturer’s incentives are not as high as they are today.


The past economic down turn has also brought with it lower financing rates that are currently remaining in the recovery.  Financing on buildings and equipment may be eligible for lower refinancing rates.  Check with your bank to see if your loans can be refinanced.  Just be sure to check the fees and costs before committing to any refinancing.

Estate Planning

Many business people have complex estates.  Along with the complexity, the average net worth of a business person is substantially higher than an employee.  The 2012 estate tax exemption is 5,120,000.  It is best to begin estate planning early in the year so issues can be resolved throughout the year and the estate plan can have time to operate during the year.  Please review your total estate value and start the process of complete estate planning now.

Succession Planning

Along with estate planning, comes business succession planning for those who own businesses.  Business succession planning is not as simple as drafting a will.  Business succession planning, when done properly, provides a smooth transition for the succeeding generation.  The process includes the valuation of the business and the creation of legal documents, such as a buy/sell agreement (the most important legal document a business owner can have.)  When succession planning is not done or is done improperly, it usually means the loss of the business and therefore the loss of your lifetime of hard work.  Don’t procrastinate, start the process now!


Too often people approach financial, tax, and business planning as an after-thought of running the operations of their business.  Operating a business in this manner does not afford the business person an opportunity to see the bigger picture.  Running a business without a plan to exit and retire is similar to driving a vehicle with no destination in mind.   Proper planning and implementation of an exit, succession and tax strategy allows you to keep more of your hard earned cash and allows you to have a better retirement when the time comes.  If you are not sure where to start or how to start, please contact the experts at The Center to assist you in your exit, succession and tax planning strategies.

By: Dr. Bart Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors