Planning Your Transition, Exit, or Next Chapter
Succession planning isn’t just about retirement. It’s about creating options for your family, your employees, your clients, and yourself.
Whether you plan to sell, pass it on, or gradually reduce your role, the earlier you start, the more control you retain.
Two Different Paths
There’s a big difference between succession planning and exit planning.
Exit planning is about walking away. You sell the business, take the check, and move on. You might stay for a year or two during a transition, but the goal is liquidity and a clean break.
Succession planning is about setting up the next leadership team to take over. That might be your son or daughter, your key employees, or a co-owner. The goal is continuity, not just cash.
Both require planning. Both require time. And both deserve a roadmap that aligns with what matters most to you.
When Is Your Child Ready to Take Over?
Many owners dream of keeping the business in the family. But the reality is complex, mixing emotion, expectations, and high financial stakes.
Before you hand over the reins, ask: Have they held leadership roles outside the family business? Do they understand both the operations and the financials? Are they respected by your team, not just related to you?
One client didn’t allow his two sons to join the company right after college. Instead, they went to a national firm and spent six years proving themselves, showing they could do the work and weren’t going to skate by on their last name. When they finally came onboard, he placed them in cubicles with everyone else so he could overhear their work. Over time, he saw they were sharp, competent, and earning respect. Only then did he begin moving them into management roles.
You can always gift the business. But you can’t gift leadership.
Selling to Your Team
ESOPs (Employee Stock Ownership Plans) offer significant tax advantages. Owners of C-Corps can defer or even eliminate capital gains taxes through a 1042 exchange, and the company itself becomes partially or fully tax-exempt if structured correctly.
S-Corps with ESOPs also benefit. Income attributable to the ESOP’s ownership percentage is not subject to federal income tax, making 100% ESOP-owned S-Corps fully federal tax-exempt in many cases.
One client loved the outcome. Once his employees became owners, he no longer had to motivate them. They motivated each other. The work quality went up, people pushed harder, and the culture flourished. Best of all, the employees who helped build the business got to share in that success as their 401(k) balances grew significantly alongside the company.
ESOPs aren’t for everyone. They come with strict rules and require a mindset shift. It’s no longer your company. It’s owned by the employees, which may include you and your family members. That means you can’t run personal expenses through the business like before.
Operational & Financial Readiness
Whether you’re selling or transitioning, there are core elements of readiness that apply to both.
Operational Readiness:
- Standardize processes and document key systems
- Strengthen second-tier leadership and empower decision-making
- Clean up the books, contracts, and cap table
Financial Readiness:
- Know what you need the sale or exit to fund
- Build a financial plan to clarify how much you actually need to walk away
- Identify any gaps in retirement savings, insurance, or estate liquidity
One client had a plan from a large firm telling him he needed $50 million to retire. He turned down a $40 million offer, thinking he had to keep pushing for more. When we redid the plan, it turned out $30-35 million would have been more than enough. But by then, the market had shifted, and the $40 million offer was long gone. Five years later, he’s still trying to get the business back to that valuation.
Knowing your number removes the emotional trap of “I need as much as possible”.
Ready to Plan Your Transition?
At a minimum, start planning three years before your exit. Five years gives us even more options to clean up your books, strengthen leadership, and increase business value.