Exit planning is much more than a static written document. It's a strategic business tool used to focus companies on maximizing business value, and it creates the opportunity for easy business transitions.

This week's Success That Lasts episode focuses on intergenerational business transfers, a common exit planning strategy within family enterprises.

Family businesses are unique. There are family dynamics at play — siblings, cousins, in-laws — as well as a powerful context of identity, reputation, and history to understand. There's also a variety of assets that need to managed and shared within families, as well as potentially disparate or competing goals of family members.

David DeLap, CPA, CEPA®, and tax partner at Delap, joins the podcast this week to discuss business transitions and family enterprises. With over 35 years of experience, Dave is a seasoned expert in accounting and wealth advisory, specializing in estate and succession planning for closely-held family businesses. He and podcast host Jared Seigel are also both Certified Exit Planning Advisors.

Tune in here, at delapcpa.com/podcast, or wherever you listen to podcasts:

Here are a few highlights from their conversation about business transitions:

  • “Exit planning combines a plan, concept, effort, and process into a clear, simple strategy to build a business that is transferable through strong human, structural, customer, and social capital," Jared explains. The future for you, your family and your business are all addressed by exit planning through creating value.
  • The three main factors that influence business transition timing are: personal timing, business cycle timing, and private capital markets timing. Jared briefly describes each factor and the roles they play.
  • As a company’s earnings increase, so does its value, Dave shares. Some internal organizational factors that contribute to its value are the strength of management, good internal controls and accounting systems, and sales contracts.
  • The only certainty in life is uncertainty. The best business owner is one who has contingencies in place for the most common business uncertainties, which are death, disability, divorce, disagreement, and distress. By having a plan for each of these 5 Ds, a business owner can pursue financial unbreakability.
  • By giving your non-voting shares to family members while keeping your voting shares, you can gift value without surrendering control, Dave briefly explains.


Know Your Gaps

The 5 Ds: Have You Planned for These Contingencies?