Succession Planning with Nirali Trovato

Succession planning for your business is essential for owners, entrepreneurs, and those on the horizon of retirement. The process should begin early on, but it’s never too late to create a plan that fits your vision. As a Certified Exit Planning Advisor (CEPA®), I can support local business owners plan an exit strategy that takes into consideration their career, personal, and financial goals during all phases of planning. These productive and value-added conversations around transition and exit are the key to succession planning.  

Plan Early 

Planning early helps to protect the operation of your business in the event of an unplanned exit. In fact, 50% of exits are caused by death, disability, divorce, distress, or disagreement. This is not only the time to consider a short-term contingency plan but also to plan the future of your business. Envision how to shape leadership roles, continue to provide for your family and loved ones, and maintain operations successfully and in-line with your strategy and mission. A contingency plan, enacted with legal documents, is necessary for your business to continue thriving. Doing so will set your mind at ease, along with ensuring your customers and employees that they can be confident in your business’ future.  

Maximize Value 

As your company grows and flourishes, you will move from the preparedness of an unplanned exit into the formulation of a planned departure. How can you protect what you have built? Your business model may have shifted over time so it’s relevant to revisit the appropriateness of the entity’s current structure, insurance, and legal documents.  

There are four intangible capitals within which 80% of a company’s value rests: human, customer, social, and structural. Have you groomed leadership within the company and developed the talent to take your vision forward? Are you considering a dedicated family member to take over the reins? Are the processes and systems in place to support growth? Is your customer base concentrated? Having the proper team and systems in place are paramount to maximizing the value of your business when you are ready to exit.  

Choose Your Exit 

The average business owner has 80% of their net worth invested in their business. Fortunes can be made or lost with a single transaction. There are many internal and external options when considering an exit. Internal options may include an intergenerational transfer, management buyout, sale to existing partners or an employee stock ownership plan. External options include a sale to a financial third party (private equity, family office, etc.), a sale to a strategic party (controlled auction or negotiated sale), recapitalization, or orderly liquidation. As a client, you would be able to leverage the resources that Raymond James offers such as Investment Banking.  

A major driver in this decision is personal financial planning. What value do you need to realize from the transaction to retire comfortably? Your financial advisor along with your tax and legal professionals will help you navigate this decision.  

With the partial or full sale of any business, an owner must consider the impact of capital gains, as well as income and estate taxes. This is why tax-mitigation and estate planning strategies are an integral part of our process. Our comprehensive approach can help to provide the financial security you worked toward when you first started your business. The Raymond James financial advisors at Towne Wealth Management and your tax professional are the best sources for information that’s personalized to your unique financial plan and future goals. 

Please contact any of our financial advisors with questions.