Planning Your Business Succession: From a Financial Advisor

June 5c 2025

No matter if you are just starting your business or getting close to retirement, you should plan your exit. Leaving your business isn’t just about ending a chapter. It’s about protecting what you’ve built and securing your financial future.

Exit planning can be complicated. You need to think about your personal goals, tax effects, and the future of your employees and customers. But with a deliberate strategy and the right professional guidance, you can craft a plan that works for you, your family, and your business.

Identify Your Ideal Successor—and Be Realistic

One of the most important questions to address is: Who will take over? Many business owners hope to keep their company in the family, passing the reins to a child or relative.

However, emotional ties shouldn’t outweigh practical concerns. Does your heir have the desire, skill set, and leadership qualities necessary to run the business? Would giving the company to one family member create conflicts with others who aren’t included?

If no family member fits the bill—or if you simply prefer a different route—you may consider a sale to a third party. This could be an outside buyer, a trusted employee, or a group of partners already involved in the business. The direction you choose will depend on how much the business relies on you. It will also depend on whether your successor can inspire confidence in future growth.

In some cases, a hybrid solution makes sense. You might sell a majority share but stay on in a leadership or advisory role for a few years. This "sell and stay" strategy is often liked by private equity firms. It lets you stay involved while slowly stepping back.

Structuring the Deal: Options and Considerations

The structure of your exit deal can be just as important as choosing the right successor. Are you selling ownership shares, company assets, or a combination? Will you receive a lump-sum payment or staggered installments? Will the compensation come in cash, equity, or promissory notes?

Each of these decisions carries tax consequences and long-term implications. For example, restricted stock, earn-out agreements, and non-compete clauses can affect your payout and future involvement. The buyer, whether a company, an internal team, or a private investor, will have their own preferences. It is important to negotiate terms that match your goals.

Work with a qualified team. This team should include a financial advisor, CPA, and business attorney. They can help you weigh your options carefully. Together, you can create a strategy that helps protect your interests.

Determining the Value of Your Business

An accurate business valuation is essential for any exit plan. For some companies, this can be simple.

For example, a retail business values its physical inventory or equipment. More often, a company's value comes from things like customer relationships, brand value, ideas, and employee skills. These factors can make up most of what a company is worth.

A professional valuation can show you how your business stacks up against others in the industry. It can also help you see what buyers might pay.

This insight may change your timeline. If the business is worth more than what a family member can afford, you may need to reconsider your plan.

If it is worth less than you thought, that could also be a sign to change your approach. You may also want to keep building value before selling.

As you clarify your valuation, think ahead to how you’ll safeguard that value during the transition. Protect key assets through legal tools like licensing agreements, intellectual property protections, and non-compete clauses. You can create retention plans to keep your best employees. This can boost buyer confidence and lead to better deals.

Align the Exit with Your Broader Financial Picture

Selling your business is not just a big step in your career. It is also a major financial event that can change your personal future. A large payout could push you into a higher tax bracket, especially if received all at once.

A skilled tax advisor can help you find ways to lower your taxes. They can suggest options like installment sales, gifting strategies, or starting a charitable foundation.

If you want to keep earning money after the sale, include that in your retirement and cash flow plans. Don't forget about your estate plan. This is a good time to review your legacy goals.

Think about how you will use, protect, or pass on the money from the sale to the next generation.

Preparing for Life After Business

Selling your business can be emotionally complex. You’ve poured your energy, passion, and identity into this enterprise—stepping away can leave a void. But with the right preparation, this transition can also open doors to a fulfilling new chapter.

Having a clear vision for life after business can help ease the transition. This could mean traveling, mentoring, volunteering, or enjoying more time with loved ones.

With thoughtful planning, professional support, and a clear exit strategy, you can step away from your business on your terms—and step confidently into whatever comes next.

Sources:

https://www.fidelity.com/learning-center/wealth-management-insights/sell-your-business

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.