Transitioning Your Business? Consider These Questions First

Succession Planning | Business Strategy

 Larry Guess By: Larry Guess

Like most major life decisions, the choice to exit your business should not be made alone.

Selling your business comes with a number of financial, legal and emotional issues—so it’s important to have a support system to keep you emotionally sound and on track with your overall goal. By vetting your options and pulling in trusted advisors and family members along the way, you can avoid making an emotional decision that has not been well thought out.

The key to a successful outcome is thorough planning well in advance of any change in ownership. While there’s no one-size-fits-all, templated process, here are some common themes I like to discuss with business owners once they’re ready to consider transitioning ownership.

1. How do you envision your life post-exit?

What are your goals and objectives? Have you asked the right questions related to timing, finances and successors?  Have you seriously considered how you will be spending your new-found time or the cost of the lifestyle you plan on having after you leave your business? How will your decisions affect family harmony?  Are there key employees you want to make sure are taken care of?  What charitable desires do you wish to fulfill?  These are just a few of the many areas you need to explore as part of your planning process.

2. When will this happen?

What are the pros and cons of transitioning now vs. postponing until later? You’ve likely heard conflicting recommendations from multiple sources on timing, valuation and legal/financial imperatives, so an advisor can help you sift through the noise. You’ll also need to consider whether you want to gradually reduce your involvement in your business over time, or if you’d prefer to walk away immediately after you sell.

3. To whom will you transition ownership?

What are the options available to you? Will you transition ownership internally to other family members, employees or partners? Perhaps you are assuming you will be selling to an external third party strategic or financial buyer.   Often, I find owners don’t recognize that there are numerous alternatives when it comes to exit strategies. It’s important to research options and choose one that is best suited to meeting your goals and objectives.

4. For how much will I need to sell my business interest?

A detailed personal financial independence analysis is the best way to answer this question.  Once you know how much you’ll need financially after exiting, you can decide if you’ll need to increase your business’ value first.  If that’s the case, you’ll also want to consider what things buyers are willing to pay a premium for and what they’ll see as discounts in value. That way, you can focus on the right value drivers for your specific situation.  Other considerations may be whether you will finance part of the purchase price of if you want to take some of your equity off the table now with an opportunity to significantly increase the amount you leave invested down the road?  Or, maybe you would you prefer cash out all at once.

Exiting your business can be a complicated, once-in-a-life time transaction. Vetting your options can be a stressful, political process, but your advisor can help you sort through which will likely provide the best outcomes to meet your objectives.  These questions are a great place to start, but it’s also important you bring in the right professional team to help you assess your post-exit goals, determine if your current valuation meets them and help you build the right value drivers if necessary.

Succession Planning


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After successfully selling his share of a business, Larry joined Plancorp in 2016 to lead our Exit Strategy Advisors division. Thanks to his extensive experience buying and selling companies in both the private and public sectors, as well as his time consulting in this arena, he’s able to connect on a personal level with clients looking to chart their own transitions. More »