Money Matters - December - 2021

Iron Shield – Buying or Selling a Business

While attending Business School at UCLA, I participated in a “Capstone Business Creation Research Project” with a group of classmates. Out of the twenty-one businesses pitched, one comes to mind that was the most promising.

A retired Marine officer, Robert Crow, researched an existing business that leased storage units to deployed military personnel. Robert desired to buy the company and rename it “Iron Shield.” The owner of the company, we’ll call him Jack, was in his seventies. Jack’s children didn’t want anything to do with his business: so, he decided to meet with Robert to talk about selling the company to him.

Jack wanted to know precisely what Robert’s business model was before considering selling it to him. Over the next two school quarters, Robert and his team worked hard developing a business model to present to Jack and the other graduate advisors at the end of the program. It appeared that Jack had two scenarios to consider – close or sell his business.

Closing His Business

Since Jack’s family didn’t want to continue the business, he could simply close the doors, liquidate the assets, settle with creditors, and walk away. If Jack were in a partnership, he would need the co-owner to agree, and they would need to follow the terms of the articles of incorporation. Then, Jack and his Partner must file dissolution documents. Failing to dissolve an LLC or corporation in any state in which it’s registered could expose him to potential penalties, fees, and taxes. Finally, Jack must cancel registrations, permits, licenses, and business names.

Selling His Business

If Jack were to sell his business to Robert, he would need to establish and justify its value. Where would Jack start to get valuation information? The Appraisal Foundation is an excellent resource for self-evaluation or learning more about resources to appraise his business.

Generally, there are three methods to calculate how much Jack’s business is worth. The Income Approach looks at projected revenue and accounts for potential risks. Then the Market Approach compares Jack’s business to other similar companies that have recently sold. Finally, the Asset Approach subtracts total business liabilities from the total value of all assets – the net liquidated value.

Eager to launch “Iron Shield,” Robert Crow presented a compelling case for Jack to sell his business to him. Perhaps Robert did too good of a job. Jack was so inspired by the plan Robert presented that he decided to keep it and implement Robert’s ideas for himself. Robert got an A on his capstone project but was out of a business deal.

If you’re considering buying or selling a business, reach out to me. The decision to purchase or sell a business can be an emotional, confusing event. Plus, assessing tax and investment options can be overwhelming. We’re here to help you through the transition so you can focus on making it an exciting life event.

Let us help you rather than going it alone. If you already have an investment advisor, congratulations. However, if you’d like to learn more about what investment advisors do for their clients, please feel free to reach out to me at for an individual assessment.

About the Author 

Edward Vela is an Investment Advisor and Estate Planning Specialist at empiriKal partners, llc©, with 13 years of wealth management experience. He earned a Journalism Certification from the University of Massachusetts, a BA in Political Science, a Financial Planning Certification at UCLA, and an MBA from the UCLA Anderson School of Management. You can contact Edward at 925-300-8805 or email

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Past performance does not guarantee future results.
The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and content provided are for general information. This is not a solicitation for the purchase or sale of any security.