Start now to find best pathway to exit family business

There are essentially two paths when it comes to transitioning the ownership of your family business – an internal transfer or an external transfer. Each path offers several options.

There are essentially two paths when it comes to transitioning the ownership of your family business – an internal transfer or an external transfer. Each path offers several options.

How do you determine which one is right for you? For a family business owner, few questions require as much soul-searching as the issue of who becomes the new owner when it’s time to retire.

That’s no surprise. Your business has likely consumed your days and nights, let alone a bunch of weekends. For years, you have focused on building and nourishing your business to be self-reliant and continue its legacy.

Getting out of your business will end up being much harder than it was for you to get in. This has become your baby, and likely you have a lot of net worth tied up in the business.

Most family business owners have more than 90 percent of their net worth locked inside the business. There are myriad implications in a family business transition, including family, financial, personal (what is next for you) and taxes, let alone leaving the business in good hands to continue its legacy and buy you out.

It’s hard to know where to start with so many moving parts.

Peter Chrisman, co-founder of the Exit Planning Institute, likens ownership transition to a three-legged stool.

Leg one ensures you have maximized the value of your business; leg two ensures you are personally and financially prepared; and leg three ensures you have a plan for the third act of your life.

If one of the legs is weak or missing, the stool topples, along with your exit plan.

It’s more than a metaphor. If you have not figured out if you can depart the business and retire on what you have saved and what you will get upon departure (the second leg), no one is going anywhere.

LVB Business Events

2019 Health Care Symposium

Thursday, August 01, 2019
2019 Health Care Symposium

2019 CFO of the Year Awards

Wednesday, September 11, 2019
2019 CFO of the Year Awards

HR Symposium

Wednesday, September 25, 2019
HR Symposium

2019 Fastest Growing Companies Awards

Wednesday, October 23, 2019
2019 Fastest Growing Companies Awards