A manufacturer who started planning his exit three years before the offer
The situation
- Incorporated light manufacturer, $4.8M revenue, owner in his early sixties planning to sell within five years.
- Significant redundant cash and a rental property held inside the operating company.
- Sole shareholder, spouse not on the share register.
What was actually wrong
- The company likely failed the asset tests for the lifetime capital gains exemption because of redundant cash and the passive real estate on the balance sheet — and the purification takes time, not a signature.
- Only one exemption was available where the family could potentially have used more than one.
- Buyer due diligence on an owner-dependent business would discount the price; nothing had been done to reduce that dependence.
- No plan for what the after-tax proceeds would actually fund in retirement.
What we did
- 1
Purify early, deliberately
Working with the accountant and lawyer, redundant assets were moved out of the operating company on a timeline that respects the exemption's lookback rules — started three years ahead, not three months.
- 2
Widen who can claim the exemption
A family trust and share reorganization put the structure in place for multiple exemptions where the facts supported it, implemented by the lawyer with the accountant's tax opinion.
- 3
Reduce owner dependence
Key-person coverage and a documented second-in-command plan, both of which show up in diligence as reduced risk rather than as a discount to the multiple.
- 4
Plan the money before it arrives
We modelled the after-tax proceeds against the couple's actual spending, so the sale price target was driven by what the family needs rather than by ego or a broker's estimate.
Where it landed
- Structure in place well before any letter of intent, so purification timing is not a deal condition.
- Exemption capacity expanded where the facts supported it, with professional opinions on file.
- A written retirement income plan the owner can hold up against any offer and answer one question: is this enough?
"My accountant is excellent, but nobody was quarterbacking the whole thing. That's what changed."
These case studies are illustrative composites based on the types of engagements we run. Names, figures and identifying details have been changed or rounded to protect client privacy. They describe process and structure, not a guarantee of any particular result. Every situation depends on your own facts, and tax and insurance outcomes should be confirmed with your accountant and lawyer.
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