Building Exit Strategy Expertise
5 tips for structuring a succession plan that secures your wealth & legacy

As a business owner, your days are full. Adding to that the uncertainty the last 16 months have brought to the industry proves you know that both life — and business — can be unpredictable. On top of the day-to-day decisions you make as a leader, the years pass quickly. Before you know it, retirement is not far away. A well-thought-out plan for passing the reins to a successor can provide peace of mind when handing over the business you’ve worked so hard to build. Whether you transition your company to a family member, a longtime employee or a new buyer, a succession plan can ensure a smooth transition that helps secure your wealth and your legacy.

Even if your retirement still seems on the far-off horizon, it’s never too early to think about the next chapter. Grooming a successor — and preparing them well — takes time, and there is no better way to transition from leader to leader like a well-documented and intentional succession plan.

Planning early gives you the upper hand while allowing you more time to consider the various exit strategies available to meet your goals. It also provides you with the opportunity to look at external factors — such as lingering effects from the COVID-19 pandemic and changes in technology — to determine how to best educate whoever might be next in line to run your business.

You can kick off the planning process by asking yourself these questions:

  • What is the timing of my departure?
  • Have I identified a team of professionals to help me through the succession planning process?
  • Do I know the value of my business and how it can affect my transition options?
  • Have I identified a successor and are they prepared to take on a leadership role in the company? How will I prepare them for success?
  • Will I play a future role in the company? How involved do I want to be after retirement?
  • Has my successor been involved in the planning?
  • Have I communicated my plan with everyone who needs to be in the loop?

1. Begin With Your Goals

First, make a tangible action plan surrounding the timing of your departure. Market timing might not align perfectly with your desired departure, so you may need to be flexible with your plans. If you are eyeing a departure time within the next 12 to 24 months consider how outside forces over the last year have impacted your business, and what those lingering effects may be.

Determine your role in the transition. Consider your current role during the transition period and identify the best person to continue mentoring your successor. In addition, think through what ongoing training opportunities look like. If your successor has been with your company for many years and understands the day-to-day operations of your business, that plan will look different from a newer employee who has a great deal of potential but not as much experience with your business, specifically. Know your options. Review and understand the outcomes of your various transition options, such as an employee stock ownership plan (ESOP), buyout, gifting and sale.

2. Choose & Prepare Your Successor

If your transition is internal, identify a successor with the leadership and management skills, desire and vision to replace you. Assess their current capabilities, skill gaps, strengths and weaknesses and begin implement development plans to bridge those gaps.

If you plan on transitioning to an external buyer, build a strong management team to maximize the appeal of your business to potential owners and prepare that team to lead.

3. Identify a Professional Team to Help You

Build a team backed with professional succession planning expertise. The team can and should include professionals, such as a qualified certified public accountant, certified valuation analyst, attorney, insurance agent and personal financial advisor.

Make a point to collaborate with professional resources to complete a business valuation, draft the long-term transition plan and develop a buy-sell agreement with the proper funding options. Know your options and have experts weigh in to avoid missteps.

Broaden your team — most business owners only go through succession planning once so consider talking to other former owners who have been successful in transitioning their business.

4. Communicate Your Plan

Formalize your succession with a statement of intention. This should include your anticipated departure timetable, your successor’s name, a funding plan for the transition and a statement of what the future ownership and management structures will look like. You can share these with all the necessary parties.

Communicate with your employees and family. Keeping everyone informed is critical for a smooth transition. Hold separate meetings with both your employees and your family and have goals for each facet of your life.


Ultimately, creating a succession plan as early as possible keeps more control in your hands for how you’re going to step away from your business life and move into enjoying your life after retirement — whatever that may look like.

5. Think Through Your Legacy

Remember that retirement can look how you want it to, and there is no one-size-fits-all solution. Many business owners choose to stay involved in some capacity, whether through as-needed consultation roles or as a behind-the-scenes expert. Your plan should be unique and serve you, your successor and your company.