When talking with business owners about selling their businesses, many finance professionals will talk about "exit strategies" or "exit planning." At Delap, we prefer to use the phrase "business transition planning," which suggests a forward-thinking approach, focusing on the next chapter that a business owner is transitioning into, rather than a backwards look at the business from which the owner is "exiting."

No matter how it is phrased, the business transition process is a critical phase in the lifecycle of a business. It involves preparing the business for a change in ownership and/or leadership, while maximizing the value.

But most business owners are already overwhelmed with the responsibilities of running the day-to-day operations of their company. So how can they possibly squeeze in the time to think about the future? When is the right time to begin thinking ahead toward when and how you would like to transition out of your business and start the next phase of your life?

In his bestselling book "The 7 Habits of Highly Effective People," Stephen R. Covey encourages us to "begin with the end in mind." Highly effective businesses should also be run with the end in mind! So, when is the right time to begin business transition planning? Now!

Knowing the answer to how and when you would like to transition out of your company can help you make business decisions that will better enable you to accomplish your ultimate personal and financial goals. You have to know where you are going in order to be able to get there!

Below is a brief overview of what business transition planning consists of and how it might impact you.

The Business Transition Process: An Overview

1. Preliminary Analysis: Evaluating the current state of your business

This stage involves a comprehensive assessment of the business's financial health, operational efficiency, and market position.

Review your financial statements and understand your cash flow, profitability, and debt levels. Verify that you are in compliance with all legal and compliance requirements. Evaluate your business processes, management team, and employees to identify areas that might require changes to improve the overall organization. Understand the market in which you operate as well as your company's strategic competitive advantage.

It's essential to have a clear understanding of your company's strengths, weaknesses, opportunities, and threats (SWOT analysis). Delap's Business Advisory team can help perform this initial assessment of the current state of your business through one of our business health checkup services.

2. Value Enhancement: Boosting the business's worth before a transition

Once you have a clear picture of the current state of your business, you can move onto making changes that will focus on maximizing the value of the business.

Strategies and actions should be aimed at increasing the overall worth of your business. Key actions that may need to be taken could include improving profitability or cash flow, reducing costs, optimizing processes, protecting and enhancing the company's assets or intellectual property, strengthening customer relationships, or improving brand reputation.

The goal is to make the business more attractive to potential buyers or successors, which will ultimately provide the most value to you as the owner.

Delap's Business Advisory team can help facilitate a strategic planning meeting, which will assist in identifying the key actions that need to be taken to provide the biggest benefit to your business. Through ongoing check-ins, the Advisory team can hold your management team accountable for implementing the strategic plan.

3. Business Transition Strategies: Exploring the various paths available

As you work on increasing the value of your business, regularly ask yourself if you are still passionate about growing the business or if you are ready to begin transitioning into your next phase of life.

Once you decide you are ready to transition out of your business, however, it might be challenging to know your options. Delap's Business Advisory team can help educate you on the advantages and disadvantages of each different transition option, including the tax implications. Depending on the individual situation, these options can include selling the business to a third party, passing it on to family members or employees, merging with another company, or even liquidating the business. The choice of business transition strategy should align with your personal and financial goals.

4. Execution of the Transition: Putting the plan into action

Once the ideal business transition strategy is determined, you can develop and execute a detailed transition plan. This includes legal and financial preparations, identifying potential buyers or successors, negotiating terms, and ensuring a smooth transition of ownership or leadership.

An important aspect of a successful transition is gathering a strong team of advisors to assist you in your transition. For many business owners, you will only go through one business transition during your lifetime. Delap's Business Advisory team has assisted many clients through business transitions and therefore can help you know what questions to ask, or to identify and navigate past any roadblocks that might arise during the process.

Having a team of experienced professionals in your corner will help increase the likelihood of a successful transition that results in the highest after-tax value to you as the owner as well as the best chance for continued success for the business after your departure.

Beyond Numbers: The Emotional Aspect of Business Transitions

There's a common perception that accountants only care about the numbers. However, as advisors, we are very aware that business transitions can be emotionally challenging for a variety of reasons. Our goal is to recognize and address these challenges in order to increase the chances for success and happiness after the transition for all parties involved.

Here are some key points for you to consider on a personal level as you begin your business transition planning process:

Identity and Purpose

For many business owners, their company is not just a source of income; it's a part of their identity and purpose in life. Letting go of something that has defined you for years can be emotionally difficult. To address these concerns, it is crucial for business owners to have a personal plan in place that addresses their post-transition goals and emotional well-being. This plan should include activities, hobbies, or even new business ventures that can provide a sense of purpose and fulfillment.

Loss of Control

Transitioning a business often means relinquishing control over day-to-day operations. This loss of control can trigger feelings of anxiety and uncertainty, as well as frustration when new management does not make decisions consistent with what you would have done. Plan ahead for how you will deal with these situations.

Family Dynamics

If the business is a family-owned enterprise, emotions can be further complicated by family relationships and expectations. Decisions about who will take over the business can lead to conflicts within the family. Communication is extremely important at all points during the business transition process. Ensure that all individuals who may be impacted by the transition have had a chance to share their feelings prior to completing a transition (and remember, there may be more people being impacted by your business transition than you even realize!)

Fear of the Unknown

The business transition process can involve financial uncertainty and the fear of the unknown. Business owners may worry about how they will fill their time or generate income after the transition. Having a deep understanding of your personal financial wealth and a financial plan outlining expected future expenses can go a long way in helping create confidence in your financial future. Delap's Wealth Advisory team can assist you by preparing a comprehensive personal financial plan.


After spending years of blood, sweat, and tears building up your business, most business owners do not want to watch their business fail after the transition. Taking all possible steps to ensure a successful transition and the successful continuation of the business after the transition can help establish a legacy that will live on even as you go about enjoying your next phase of life.

Professional Support

Seeking the guidance of a financial advisor, therapist, or a business transition coach (or all of the above!) can be invaluable during this process. These professionals can help provide guidance on financial and personal planning, as well as help prepare you for the emotional challenges along the way.

In summary, the nuts and bolts of business transition planning involves evaluating the current state of the business, enhancing its value, considering exit options, and implementing a business transition plan. However, managing the emotional aspects of any transition is equally important, and having a personal plan and professional support can help business owners navigate this challenging journey with greater confidence and peace of mind.

Please reach out to Delap's Business Advisory or Wealth Advisory teams if you are thinking about a business transition and would like some guidance on how to get started!

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