Family Business Exit Planning

Paving the path for seamless transition with family business exit planning

Crafting comprehensive plans to navigate ownership transitions, manage financial implications, and safeguard your business's prosperity. We're here to ensure a thriving legacy and satisfaction for all stakeholders.

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What is Family Business Exit Planning?

Family business exit planning is the process of creating a plan to ensure the successful transfer of a business from one owner to another. It involves making decisions about who will take over ownership, how the transition will be managed, and what financial considerations need to be taken into account. The goal is to ensure that the business continues to thrive and that all stakeholders are satisfied with the outcome.

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Purpose of Family Business Exit Planning

Establishing ownership

An exit plan should help to define who will own the business and how ownership will be transferred. This includes deciding whether the business will stay in the family or be sold to an outside party.

Creating financial independence

Create financial independence for the generation closest to exiting the business by setting up retirement funds, investing in other businesses, or providing other forms of financial security for those leaving the company.

Aligning family members and management

Family-owned and operated companies must have alignment between family members and management when it comes to the vision and plans for the future of the business.

Why Family Businesses Should Prioritize Family Business Exit Planning

Family business exit planning is essential to ensure a smooth transition. It outlines the steps necessary for a successful transfer, establishes ownership and provides financial independence. Additionally, it can help to align family members and management on the business vision. Without proper exit planning, family businesses may face friction and lack of clarity.

How Family Business Exit Planning Works

Each family business is different, so a tailored approach that fit your family’s values and circumstances is necessary.

Start the conversation

The first step in family business planning is to start the conversation about exit planning early on. This will help ensure that everyone is on the same page and that there are no surprises down the road.

Develop a plan

This plan should include a timeline for assumption of responsibilities, criteria on who has what authority for decision-making, and strategies for business stability and growth.

Put your plan into action

Once you have developed your plan, it’s time to put it into action and reach the benchmarks. Any changes or updates to your plan are communicated clearly so everyone is on the same page moving forward.

Common problems with Family Business Exit Planning

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Failing to plan in advance

Without an exit plan in place, the transition process can be difficult and costly if younger generations do not wish to take over the business.

Emotional involvement

High levels of emotional involvement can lead to disagreements and miscommunication between family members that can complicate the transition process.

Mismatched expectations of financial gains

There may be different expectations among family members about how much money each person should receive from the sale of the business or other financial arrangements related to the transition process.

Losing control

For many family business owners, giving up control of their company is one of the most difficult aspects of exit planning.

How to implement Family Business Exit Planning effectively

Assess

Take inventory of the business's assets, liabilities, financial position, external environment, and family dynamic between owners and stakeholders.

Plan

Develop a comprehensive plan to address goals and objectives associated with transitioning control and ownership in relation to family members' interests.

Monitor

Review progress and make any necessary adjustments along the way. Communication is key to ensure all stakeholders are on board with exit strategy decisions.

Adjust

Exit planning should be seen as an ongoing process rather than a static one-time event. As circumstances change, it may be necessary to adapt and adjust plans.

Are you a family business leader looking to expand and perpetuate your family's legacy?

Each of our strategy consultants bring 20+ years of experience in working with family businesses to help you address the key issues you face in preparing your family business to continue to the next generation.

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