exit preparedness Archives

The Transfer Options Many Owners Don’t Consider

October 22, 2026 by John F. Dini

Transfer Options If you ask most business owners what their exit strategy is, they will tell you they intend to sell the business to a third party. It is the most straightforward-sounding option. Find a buyer, negotiate a price, sign some documents, and walk away with a check. The problem is that it may be the hardest option to execute successfully.

According to data from business broker associations, intermediaries fail to sell approximately eighty percent of the businesses they list. When you run the arithmetic on how many businesses are available for sale versus how many buyers exist in any given market, the odds for a typical owner are not encouraging. Yet most owners approach this as their principle plan, not just as a fallback.

Your job as an advisor is to help them understand the broader range of options before they commit to a strategy that may not work. It’s important to start that conversation early enough that the alternative options are still available.

Why the Default Option Is the Hardest One

A third-party sale requires a buyer who is willing to pay a price the owner finds acceptable, has the financial resources to complete the transaction, and is prepared to take on the responsibility of running the business without the current owner. That is a combination that doesn’t always present itself on demand.

It also exposes the owner to a process that most are not prepared for. First is the confidential marketing, then buyer qualification, then due diligence. If you get that far there’s a negotiation of terms, determining representations and warranties, and a transition period that may require the seller to remain involved for a year or more after the sale. It’s not unusual to have an earn-out that depends on performance during that time, or perhaps even afterwards.

The process is time-consuming, often emotionally difficult, and frequently results in a price below what the owner expected.

None of that means a third-party sale is the wrong option. It means it needs to be approached with realistic expectations and thorough preparation. Our job is to help the owner needs to the alternatives.

Option Two: The Internal Sale

Selling to employees or a management team is, in many cases, the most controllable exit option available to a business owner. It is consistently underutilized because it is consistently misunderstood.

The most common objection I hear is “My employees don’t have the money.” That is often not the obstacle it appears to be. A well-structured internal sale doesn’t require employees to show up with a check on closing day. It uses the cash flow of the business itself as the source of acquisition financing and may include equity compensation programs to allow qualified buyers to accumulate ownership over time.

The owner can often maintain control until they are paid. The buyer is someone who knows the business and has been trained to run it. The transition is gradual, planned, and far less disruptive to customers, employees, and operations than a third-party sale.

It typically takes five to seven years to structure and execute a leverage buy-out properly, which is why the conversation needs to start early.

Option Three: Family Succession

When a family member is being positioned to take over, the planning challenges are different but no less significant. Family succession is not merely a matter of adding the next generation’s name to the ownership documents.

The incoming generation needs to earn credibility with employees, suppliers, and customers. That requires time and working in the business in a way that builds genuine capability. The financial structure of the transfer needs to be clear, so the outgoing generation is reasonably compensated and the incoming generation isn’t saddled with debt that undermines their ability to invest in the business.

And the family dynamics relationships, expectations, and the old grievances that never quite got resolved, are present in every conversation. They don’t disappear because the topic is business. If anything, the stakes make them more vivid.

Advisors who can help a family navigate those dynamics are providing a genuinely valuable service.

Option Four: Planned Liquidation

This option is less exciting to talk about, but it is the right answer for more owners than anyone (especially those owners) wants to admit. If the business cannot realistically be sold for a meaningful multiple, or if the owner is the business in ways that can’t be separated, then the owner should run the business profitably for as long as they choose, pay themselves well, invest those proceeds appropriately, and wind down the company when they are ready.

That is not failure. That is a rational financial decision. A business that generates good income for its owner for twenty or thirty years likely has fulfilled its purpose, whether or not it sold at the end.

Helping an owner see that option clearly is serving them better than pursuing a third-party sale that the market won’t support.

Option Five: Watch and Wait

Some owners have built businesses with characteristics that make them attractive to specific buyers in specific market conditions. There may be an opportunity for a strategic acquisition by a competitor, a private equity roll-up of their industry, or a specific buyer who appears at the right moment.

An owner who has kept the business performing well, maintains clean financials, and has structured the company to be transferable is positioned to take advantage of those opportunities when they arise. Waiting for the right buyer is not the same as having no plan.

Your Role in Expanding the Conversation

Most owners default to the third-party sale because it’s the one they’ve heard of. They’ve never had an advisor sit down with them and lay out the full menu of options, and their potential given the circumstances of the owner and the business.

That conversation, done well, is one of the most valuable things you can offer. It positions you as the advisor who is thinking about their whole future, not just the transaction. And it gives you something to plan together, which is where the most valuable advisory relationships are built.

John F. Dini develops transition and succession strategies that allow business owners to exit their companies on their own schedule, with the proceeds they seek and complete control over the process. He takes a coaching approach to client engagements, focusing on helping owners of companies with $1M to $250M in revenue achieve both their desired lifestyles and legacies.

Every Owner Needs a Continuity Plan

September 24, 2026 by John F. Dini

Business Continuity Exit planning conversations tend to focus on the voluntary transition, an owner who decides they are ready to move on, begins preparing the business, and eventually negotiates a sale on favorable terms. That is the version of the story everyone hopes for. It is not always the version they get.

In my experience working with business owners, the planned, orderly transitions require considerable anticipation. However, there are any number of the “Dismal Ds” including death, disability, and disease, can create forced transitions that happen on a timeline and under conditions that benefit no one.

The business owner who hasn’t anticipated those possibilities is not just taking a personal risk. They are leaving their family, their employees, and their legacy exposed to outcomes that could have been prevented.

Contingency and Continuity

There is a difference between a contingency plan and a continuity plan. A contingency plan addresses a business interruption, loss of records, or natural disaster. Many companies have one. They may include backups, alternative workspaces, and emergency lines of credit.

Contingency plans typically lean on one critical factor. They anticipate the presence of the owner to lead the business through a crisis. What if the crisis is the incapacity of the owner? In such cases, a continuity plan is the more appropriate backstop.

Death is the most obvious, and the most clearly planned for in many companies. Life insurance is a standard recommendation, and many owners have some coverage. But does the coverage reflect the actual value of the business? Does anyone know what to do with the business if the owner dies tomorrow — including who is authorized to sign checks, which vendors need to be notified, and who assumes key relationships with major customers?

Disability from disease or accident is statistically more likely than death, and less consistently planned for. A business that can’t function without the owner present faces a serious cash flow crisis if that owner is incapacitated for three months, six months, or longer. In cases where the owner is expected to recover, the business may go into a kind of stasis, postponing critical decisions or new initiatives.

In these cases, the owner may be forced to return too quickly to address failing performance or comes back to a company in crisis.
None of these events can be anticipated. They only need to be handled well.

The Business Continuity Gap

If you asked ten of your business owner clients what would happen to their company if they were unable to work for six months starting tomorrow, how many of them could give you a confident, specific answer?

In reality, very few. Most would describe a rough plan that relies on one or two key people, assumes that customers will stay, and hopes the business will hold together until the owner recovers. That is not a plan. That is optimism.

A real business continuity plan documents who has authority to make financial decisions. It identifies the company’s critical relationships and who is responsible for maintaining them. It specifies where important documents are located, what outstanding obligations need to be honored, and what the first steps are in each of several different contingency scenarios.

The plan should also inform a family member or trusted associate where the owner’s personal passwords are recorded.

It exists in writing, and it exists somewhere that is accessible to the people who will need it, which means not just in the owner’s head.

Buy-Sell Agreements can Address Continuity

For businesses with multiple owners, a buy-sell agreement is not optional. It is the document that answers the most important question in a partner’s death, disability, or departure: who buys whose interest, at what price, and on what terms?

Without a buy-sell agreement, those questions get resolved by negotiation under pressure (Dissention) or by litigation. The results are rarely favorable for anyone involved.

A buy-sell agreement that hasn’t been reviewed in ten years can be almost as dangerous as not having one. If the valuation mechanism in the agreement uses a formula that made sense when it was drafted but doesn’t reflect current market conditions, the resulting price can be wildly wrong in either direction.

The funding mechanism matters as well. A buy-sell agreement that requires a surviving partner to write a large check immediately, without insurance or financing in place to make that possible, is a plan on paper that can’t function in practice.

The Myriad of Dismal Ds

Other Ds are just as threatening to the company but are much more difficult to plan for. Divorce can force a liquidity event in a business that isn’t prepared for one. Distress may include financial challenges that force a sale when the profitability is poor. Disagreement between partners can paralyze a company and force a transition under the worst possible conditions. Defection of a key employee or customer may also deal an unrecoverable blow.

Disenchantment (burnout,) Disinterest, Distraction and Depression may put an owner out of commission as certainly as any physical illness. In such cases, planning is useless. Only a key employee or partner, operating in a culture of honesty, can address the issues.

The challenge with both contingency and continuity planning is that they require preparing for scenarios that feel remote. Business owners are optimistic by nature. They don’t build companies by dwelling on worst-case scenarios. The same forward-looking confidence that made them successful entrepreneurs also makes them resistant to planning for events they don’t expect to happen.

Your role as an advisor is to make the planning feel less like preparing for disaster and more like protecting everything they’ve built. Frame it correctly, and most owners will engage. The protection their family deserves. The employees who depend on the company continuing. The legacy that shouldn’t disappear because of an event no one planned for.

Seize The Moment: Strategically Timing Your Retirement When Selling Your Business

April 23, 2025August 6, 2024 by Kerry Boulton

Time is money finance concept with old vintage clocks, dollar bills and magnifying glass.

Imagine standing at the edge of a cliff, ready to take a leap into a new chapter of your life. That’s retirement. Now, picture this adventure interwoven with the sale of your business. Exciting, right? Just like any daring journey, timing is everything.

Let’s talk about finding that perfect moment to embark on your retirement while selling your business. It’s not just about calendars and clocks; it’s about aligning the stars to make the most of your hard-earned efforts.

First off, consider the market trends. Are you in a booming phase where your business value is at its peak? Capitalise on that surge to secure a comfortable retirement fund. On the flip side, if the market is shaky, give it time to rebound before exiting.

But it’s not just external factors — your internal readiness matters too. Ask yourself: Have you achieved your personal and financial goals? Are you emotionally prepared to let go of the business you’ve nurtured? Your gut feeling often knows best.

Also, think about your successor. Is there someone you’ve been grooming to take the reins? Timing your retirement when your successor is ready can ensure a smooth transition for both you and your business.

Let’s talk about legacy. How do you envision your business carrying on without you? Timing your retirement allows you to leave behind a legacy that echoes your values and vision. It’s like passing the baton in a relay race — a moment of seamless exchange ensuring the race continues strong.

In the end, timing your retirement while selling your business is like orchestrating a symphony — a blend of external harmony and internal rhythm. When you feel that crescendo building, that’s when you know it’s time to take that leap.

Kerry Boulton, CEPA is Australia’s most respected exit strategy advisor. With over 20 years in business as an entrepreneur, transformative coach, consultant, sought after speaker and talented facilitator, Kerry has been helping business owners like you to overcome challenges while providing the steps needed to ensure that you find the financial freedom you deserve.

Exit Strategies – The Road Less Traveled

September 28, 2023 by John F. Dini

The road less traveled is often a misimpression when considering a transition from business ownership. Surveys show that roughly 85% of owners expect their exit to happen via a sale of the business to a third party.

A third-party sale is certainly attractive. The idea of monetizing decades of work in one lump-sum payoff seems equitable. Years of sacrificing to “invest in the business” is supposed to generate a return. “He (or she) sold the company” when applied to someone who is clearly enjoying a comfortable lifestyle in retirement acts as an advertisement for the benefits of cashing out.

Unfortunately, that isn’t only less frequent than assumed, but it’s so infrequent as to be close to a rarity.

The Numbers Don’t Lie

Baby Boomers owned businesses at about twice the rate of previous or succeeding generations. Franchising and an overcrowded job market for corporate careers drove about 6% of Boomers into entrepreneurship, where the traditional average for business ownership is closer to 3% of the population.

A decade ago, according to the SBA, about two-thirds of all businesses between 5 and 500 employees were owned by persons 48 years old or older. Today, just over half are owned by folks over the age of 58. That makes it pretty safe to extrapolate that around 4% of that age group still own businesses.

Census data puts the number of persons turning 65 years old at 10,000 a day, so it’s a decent guess to say that 400 of those, on average, probably own a business. That’s 2,800 a week, or about 140,000 a year. Not everyone exits when they hit 65, and almost 90% of those businesses employ fewer than 20 people.

For exit planning discussions, let’s divide the under and over-20 employee companies into two groups, which we will call “Main Street” and “Mid-market.” (Note- this is not a valid market definition of those two terms. For further explanation see the Afterword in my most recent work The Exit Planning Coach Handbook.”)

Main Street companies would then be 90% of our 140,000 owner population. That’s 126,000 businesses. According to the IBBA, Business Brokers sell about 8,000 Main Street companies annually, or about 20% of those they list. That leaves 92% of Main Street owners to find another way.

Of the 14,000 or so that we are classifying as Mid-Market, Private Equity activity accounts for about 6,000 transactions annually, many of which are handled by brokers. (So there is an unknown amount of double counting here.) The last two years saw a spike of about 50% in acquisitions due to low interest rates, but it is safe to say that at least a third of these presumably very desirable middle-market businesses have to find an alternative exit plan.

Advisors Ignore the Numbers

With these statistics, why do owners and their advisors continue to focus on exit strategies that only work for a small minority? The higher visibility of transactions is part of the bias, as are the higher professional fees that they generate, but the biggest issue is a lack of advisor education.

Advisors who work with owners approaching a transaction have an obligation to inform them of their options. Unfortunately, this is not always the case. We survey the exit planning industry annually. Only between 5,000 and 6,000 advisors claim exit planning as an offered service. That’s an advisor-to-owner ratio of 23:1 each year. If we consider the entire remaining population of Boomer-owned employers, that ratio is five hundred to one.

Most owners have 50% of more of their personal net worth in the business. Yet we continue to see financial planners who base their clients’ retirement calculations on an unconfirmed estimate of what the company will contribute via a third-party sale, when such a sale may be the least likely outcome. A financial plan for a business owner cannot be holistic if it doesn’t consider 50% of his assets.

Attorneys and accountants frequently report that the first time they interact with a client about exiting is when a purchase offer is already on the table. Proactive discussions about eventual transfer or succession are usually brief, and cease when the client says “I’m not ready yet.” They let their clients postpone the discussion until circumstance or happenstance intervenes.

Business Brokers, of course, only talk to clients who have already decided on their preferred course of action. As a former Certified Business Intermediary, I can say from experience that unfortunately, most have no alternative for the 80% of listings they can’t sell.

The Road Less Traveled

The truth is, despite popular conceptions to the contrary, sales to third parties are the road less traveled. Certainly, many lifestyle businesses are really jobs and have to close when the founder/owner/CEO retires. Many others, however, could recoup the owner’s investment with a structured transfer to employees.

Given a few years, most owners could hire and train a suitable buyer. That usually requires support, since few have experience in recruiting and teaching someone to do what they do. There is also some education involved to help the owner understand how investing in a top-flight employee today can pay huge dividends in the future.

Additionally, there is the issue of owners who believe that they have to keep any rumor of their impending retirement from others in their industry. Customers, vendors and competitors are a fertile market for acquirers. A good advisor can act to maintain confidentiality when putting out feelers.

Advisors need to be more proactive in approaching clients about their objectives and their options. Initiating a structured conversation around both is in the best interest of the client and the advisor. They may choose to avoid the road less traveled.

Focus On Net Proceeds And Not Just Sale Price When Selling Your Business

December 13, 2024April 25, 2023 by Pat Ennis

John was excited as “today is the day!” Twenty-five years ago this month he had started his home remodeling business with a truck and a tool belt, and today at 3pm he was going to the deal table to sell his business to a much larger remodeling company. It would be a strategic purchase for the buyer who was willing to pay a premium with a goal of expansion in the region. With the check received today, John knew he could now do everything he and Kim had thought about doing for years — travel, more time with the family and for hobby’s and other interests they both enjoyed.

The amount received actually exceeded John’s “number”, and hence, he and Kim spontaneously pulled together a celebration dinner with family and a few close friends at their favorite restaurant. John had done a great job through the years building a “saleable business” focusing on a strong management team, strong financial performance, a plan for growth, up-to-date systems and processes and other value drivers which and now he was reaping the rewards. There was indeed much to celebrate!

Fast forward, six months later: John has come to realize that his number needed to be quite a bit larger than what he had originally calculated. In whatever way he had performed his calculations, he failed to consider to the extent needed, or at all, the following important factors in the equation:

• Of the $10 million in proceeds, he was going to net approximately $6 million after these charges/expenses:

o Transaction and professional fees.
o An asset sale was negotiated and there was income tax on some asset depreciation recapture.
o $1 million in business debt needed to be repaid.
o Capital gains and affordable care act taxes.
o Miscellaneous expenses including “stay bonuses” for two key employees.

John was in a small percentage of small business owners who have built a saleable business and actually sold it for their “number”. For that, he is to be commended and congratulated. At the same time, John was now experiencing much regret and was actually concerned about his financial ability to do everything he and Kim had planned on. What could have John done differently when planning for this most significant event? Worked with his exit, financial, transaction, and tax advisors well in advance of the sale in calculating the real number… net sale proceeds…and whether or not he and Kim could do all they wanted with that number.

Pat Ennis is the President of ENNIS Legacy Partners. The mission of ELP is to help business owners build value and exit on their own terms and conditions.