Planning a Transition — Who Should You Surround Yourself With?

Transitioning or selling your business can be the most exciting time of your career — or, because you only have one chance to get it right, one of the most challenging.

Whether you're considering retirement or looking to diversify your wealth, learn how thoughtful business transition planning can offer a path that aligns your personal and professional goals.

When to sell your business

How do you know when it’s time to sell your business? The signs may be different for every owner and the reasons are often personal. And this decision can be nearly as important as the decision to go into business in the first place.

Personal reasons

One of the most common reasons for selling a business is retirement, and statistics from the U.S. Census Bureau indicate an aging demographic among business owners.

Health reasons

Managing a business while dealing with health challenges of either the owner or their spouse can become unsustainable, prompting the decision to sell.

De-risking wealth

Many owners have their wealth concentrated in their business, which can be risky. Selling the business can help diversify assets by spreading net worth across various investments.

Business considerations

Factors like revenue stability and growth potential are crucial. Companies that have stabilized after periods of volatility may find it a favorable time to sell.

What’s involved in business transition planning?

Planning to transition your business is a complex process — and it goes beyond the actual transaction and business terms. From assessing the current state of the business and market conditions to identifying your personal motivations and monitoring risk, having a detailed business succession plan and an experienced team of professionals can help set you up for a smooth and successful experience.

Judging timing and market conditions

Timing is critical when selling a business. Economic conditions, interest rates, and changes in tax laws can all impact the decision to sell. A strong economy generally leads to higher valuations and increased M&A activity.

Engaging and retaining team members

Maintaining open communication with employees during the transition is vital. From leadership succession decisions to retention strategies, consider how to engage key team members, as their involvement can significantly impact the success of the sale.

Selling your business is a complex process and seeking professional guidance is crucial.

The mergers and acquisition process

The typical M&A process generally takes six to eight months, but a comprehensive business transition process looks at more than the actual transaction. Key steps for the M&A piece of the plan include:

• Preparation of confidential information memorandum
• Approaching potential buyers
• Indication of interest
• Management presentations and due diligence
• Letter of intent

Who do you need on your business transition team?

Professional owner transition advisors can help anticipate and address problems so that your transition is a well thought out event. They can help you lay out a plan that incorporates what matters most to you:

• Providing for your family and your business in the case of tragedy
• Family dynamics surrounding asset and ownership transfer
• Preparing for a successful business transfer to employees, heirs, or outside buyers
• Positioning the business for a profitable sale or merger
• Safeguarding continued business growth
• Securing your legacy in the community
• Retaining enough assets to fund your retirement

Ultimately, the decisions you make ahead of the transition can have a long-lasting impact on the business after you are no longer involved. Having a close connection to a team of professional advisors can alleviate much of this burden.

When assembling your team of advisors to help implement your transition plan, look for a team with capabilities for:

• Business transfer strategies
• Comprehensive succession planning
• Financial and estate planning
• Insurance and risk management
• Business valuation
• Sell-side due diligence
• M&A advisory and investment banking
• Strategic tax planning

Your team of advisors can help you, your family, and your employees prepare for a healthy, productive, and smooth transition.

How CLA can help with business transition planning

Business transition planning helps you prepare for a smooth transfer of ownership and management — and it’s never too early to start.

Our team of professional owner transition advisors works alongside you to understand your specific business needs and goals. With the right support, we can help you start your business transition planning to safeguard your business continuity, growth, and legacy for a smooth and successful transition.

Contact us

Are you planning to transition your business? Complete the form below to connect with CLA.