Get Ahead: Plan Your Business Transition Now

By Alex Fratti, CFA

For many business owners, stepping back from the company they've built over years—if not decades—of hard work can be frustrating and unpleasant. The process is filled with uncertainty: What does succession look like for me and for the Company?  How can I properly monetize the value through a transition to support my retirement yet not strap the Company with unsustainable debt? And perhaps most importantly, where do I even begin?

At Boyer & Ritter, we believe the first step starts with asking the right questions. Our free 22-question online assessment tool takes about 15 minutes to complete and is a great place to start. The tool examines four key areas: planning, finance, revenue/profit, and operations. The questions in this tool don’t just ask about where you want to go—they provide the foundation for a clear, strategic plan that can lead you there.

Why Use an Exit Map to plan your transition?

Think of a transition map as a framework to get you started, laying out the critical steps you need to take as you move toward the future, whether that means selling your business, passing it on to family, or transitioning to new leadership. Without a map or a plan, you lower the likelihood of a successful transfer that can delay or even derail your plans.

Our Assessment Tool guides business owners through these critical areas, offering a step-by-step approach to ensure the process is smooth and the outcome successful. But what makes our tool so effective is the emphasis it places on asking questions that lead to actionable insights, better preparation, and ultimately, a smoother transition.

Why Are the Questions So Important?

Each question is designed to uncover essential aspects of your business, your personal goals, and your readiness for the transition. Here’s why these questions matter:

1. They Identify Gaps in Preparation: Many business owners operate day to day and don’t realize how much planning a successful transition requires s. From evaluating financial health to understanding your tax obligations, these questions uncover areas that may need more attention before you move forward.
2. They Clarify Your Vision: What do you actually want from the transition? Are you looking for a full retirement, or do you want to stay involved in some capacity? Do you plan to pass the business to family and/or management, or are you looking for third-party buyers?
3. They Highlight Potential Risks: Questions about legal structures, employee preparedness, and succession plans shine a light on potential pitfalls. These areas can quickly become vulnerabilities if left unaddressed, leading to delays or loss of value when the time comes to transition.
4. They Help You Measure Financial Readiness: One of the most critical components of a successful business transition is knowing your business’s worth and financial health. Are you prepared for the taxes involved in selling or passing on your business? Do you have a strategy for maximizing the sale price or managing the proceeds? These questions can help you assess where you stand financially—and whether adjustments need to be made before a transition.

Once you answer the fundamental questions, you’ll receive a customized report highlighting your readiness score in the key areas. From there, you’ll have a better sense of where you stand and where you may need to have further discussions with your advisory team, which may include your attorney, accountant, financial advisor, as well as family members and key stakeholders.

• What is your time frame for exiting your business?
  • Knowing whether you plan to step away in the next 2, 5, or 10 years helps frame every other decision. If your goal is within the next five years, you should begin working on valuation and succession planning now. If it’s further down the road, you have time to fine-tune operations or build additional value.
• Who will be involved in the decision-making process?
  • Is your business solely owner-driven, or do you have a team or other stakeholders that need to be involved in major decisions? Identifying and communicating with the key players ensures everyone is aligned and helps avoid conflicts down the road.
• Do you know your company’s current market value?
  • Many business owners have only a rough estimate of their business’s worth, and that lack of clarity can be costly. A valuation is not just about selling—it provides insight into the drivers of value, and helps you focus on taking steps to increase the value before transitioning How does your business compare to other businesses in your industry? Without an accurate valuation, you may miss opportunities to improve profitability or could undersell your business when the time comes.
• How prepared is your business from an operational standpoint?
  • What happens if you’re suddenly unavailable to run the business? How well documented are your processes and is your management team prepared to carry on? This question is crucial because buyers or successors will place a high value on a business that runs smoothly without the current owner present.
• What is your tax strategy?
  • Tax implications can significantly affect the financial outcome of your transition. Whether it’s capital gains taxes from a sale or estate taxes when passing the business to family, planning ahead can preserve more of your hard-earned wealth.

Family-owned businesses account for about 5.5 million of the businesses in the United States, contributing significantly to the economy. However, over 70% of business owners lack a formal succession plan.

Without a plan, business owners are risking an unsuccessful transition, which could jeopardize their financial future. 

The Boyer & Ritter team is ready to answer questions and ensure a successful exit from the business you worked so hard to grow and nurture.

Alex Fratti, CFA, is a Senior Associate at Boyer & Ritter, collaborating with Scott Koman, CPA, CVA, CFE, MAFF and Thomas Taricani, CPA/ABV, CVA, CEPA in the firm's Valuation Advisory Services practice. To connect with our Exit Planning team, feel free to reach out to Fratti, Koman, or Taricani at your convenience.