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The Business Owner Exit: How to Navigate the Succession Process Thumbnail

The Business Owner Exit: How to Navigate the Succession Process

By Bryan Lee, CFP®, MBA

From that first spark of a creative idea to managing a full-fledged operation, choosing to run a business is not for the faint of heart. And, it’s not only work–it’s personal. Your business represents your hopes, dreams, and, yes, your finances. That’s why it’s important to plan for when and how you’ll transition out of your role as a business owner as you near financial independence. 

Unfortunately, less than 25% of private business owners have established a formal business succession plan. (1) This failure to plan can be attributed to two main factors: 

  1. Business owners are more focused on working in their businesses rather than on their businesses. 
  2. The process of creating a proper succession plan can be difficult and overwhelming. 

So, why not rely on the experience and expertise of professionals who can guide you through the process? Here’s a glance at what our team will do to help you implement a succession plan for your business: 

Stage One: Initial Discovery Meeting

We’ll help you define your exit objectives and goals:

  • What is your desired departure date? More options can be considered if planning occurs sooner rather than later, and it usually takes time to properly structure a succession.
  • What are your income/financial security requirements? Do you want to remain in the business after the sale?
  • What exit routes are open to you? Acquisition, internal succession, stay or walk away, etc.?

Stage Two: Financial Review

We’ll provide an analysis of your personal finances: 

  • Review existing financial statements, estate documents, and business plans
  • Determine gaps in your existing plans, if any, and how to resolve them

Stage Three: Determination of Business Value

We’ll look at your current valuation and the drivers that contribute to that value:

  • Analyze each exit route to determine how to protect and increase the value of the business 
  • Review the tax implications of ownership transfer through sale, gift, and estate planning
  • Obtain a formal valuation performed by an independent third party

Stage Four: Choosing an Exit/Transition Route

We’ll discuss the following options and help you determine the best route for you: 

  • Sell to an outside third party (financial or strategic buyer)
  • Sell to employees using an employee stock ownership plan (ESOP)
  • Sell to one or more key employees (management buyout)
  • Sell to remaining shareholders
  • Transfer the company to a family member or family members
  • Retain ownership but become a passive owner
  • Determine the cash down payment and bank or seller financing.

Stage Five: Implementation of Exit/Transition Route and Post-Transaction Servicing

We’ll walk the business through your planned transition:

  • Engage with the new leadership to execute the chosen business exit route (external or internal sale or transfer)
  • Develop a contingency plan for the business (external or internal sale)
  • Develop a contingency plan and ongoing servicing plan for the business and family (transfer of the company to a family member)

We’re Here to Help

Exiting or transitioning your role in your business will likely stir up a mix of emotions. As with any important business decision (and especially when emotions are high), it’s wise to partner with a financial professional who can serve as an objective and knowledgeable third party. We at Strategic Financial Planning would be honored to help you navigate these decisions, the transition, and whatever comes next. To get started, call (972) 403-1234 or contact us online to set up a complimentary get-acquainted meeting so we can see if we are a good fit! 

About Bryan

Bryan Lee is the founder and president of Strategic Financial Planning, Inc., an independent, fee-only financial advisory firm. With more than 27 years of industry experience, Bryan uses a unique client-first financial life planning approach and process to help his clients get the most out of life. Bryan earned his Bachelor of Business Administration in finance and his MBA in international finance from the University of North Texas. He is also a CERTIFIED FINANCIAL PLANNER™ AND CFP®. 

Bryan is actively involved in his community and industry and has served on the boards of several associations and charities, including the Dallas/Fort Worth chapter of the Financial Planning Association, the National Association of Personal Financial Advisors, Family Services of Plano, the CITY House, and the Journal of Financial Planning. Bryan has been featured in local and national media, including The Wall Street Journal, Investors Business Daily, CNNfn, USA Today, SmartMoney, Kiplinger’s Personal Finance, Financial Planning Magazine, The Dallas Morning News, and Dow Jones Newswires. And, he has been recognized as a Five Star Wealth Manager and one of Dallas’s Best Financial Planners in D Magazine every year since its inception. To learn more about Bryan, connect with him on LinkedIn.


(1) https://www2.deloitte.com/content/dam/Deloitte/us/Documents/deloitte-private/us-dges-business-succession-planning-collection.pdf