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Retiring Soon? 5 Tips to Getting Started With the Business Transition Process

At the most basic level, business transition planning is a strategy that can be put into play when a business is sold or changes hands. For company owners nearing retirement, a successful transition plan can play an important part in creating and preserving the value of the business after its changed hands. 


Here are some tips to keep in mind if you want to maximize the return on your investment as you prepare for retirement. 

Tip #1: Evaluate Your Market Potential

Take a long, honest look at your business and the broader economic climate when estimating your chances of a successful transition. Consumer confidence in your community, region or industry may influence the future value of your business. It may also be helpful to note the growth of your enterprise versus the industry overall. Additionally, doing this early and long before you hope to transition your business may help reveal the potential for future growth.

Tip #2: Prepare Your Business

Next, look for anything that may delay or negatively impact the transfer of your business. This may include an evaluation of your personal and business tax returns by a financial professional, as well as a review of any potential local or state tax issues. If you have a business presence in multiple states, this may also help avoid potential tax issues. 


Now is also an ideal time to contact a tax professional if you're thinking about restructuring your business for tax purposes. They may be able to help navigate the potential drawbacks and highlight any benefits that may result from a restructuring.

Tip #3: Do Your Due Diligence

If your business's financial documents aren’t up-to-date, now is the time to remedy that. 


Standard documents to check could include:

  • Incorporation documents
  • Equity ownership records
  • Meeting minutes
  • Tax classification records


If you do have equity holders, do you know if they are entitled to a right of refusal? Additionally, if your business owns any intellectual property, are you certain it has been properly registered? The answers to these questions may have considerable implications for your transition plan. 


This is also the time to start thinking about your existing business relationships. Existing long-term contracts or distribution agreements may need to be evaluated as well. 

Tip #4: Include Your Employees

At some point in your plan, it may be helpful to share your transition strategy with those you employ. Have answers ready for some tough questions, as you should prepare to be as transparent as possible. Securing employee buy-in can be a powerful element to your strategy and that can lead to essential conversations with those you trust most. 


Remember, your business isn’t the only thing that is going to change through your transition. The livelihood of your employees and their families will be impacted as well, meaning it’s important to allow them to voice their concerns. Creating a safe space for open conversations may help alleviate their worry.

Tip #5: Ask For Help

If you’re like most successful entrepreneurs, you already have a dedicated team of professionals to help your business. In addition to the CPAs, insurance agents or wealth managers you may already utilize, an attorney who specializes in estate planning and a business attorney may be valuable additions to your team. 

Choosing one key individual or “transition czar” to lead the group may also be a smart move. Consider designating a single point of contact who can help with the coordination efforts and clear up confusion during the transition period. 

Remember, it’s okay if you’re unsure which steps to incorporate into your transition plan first. Just like your business, managing your transition is a team effort; you can’t just rely on a single leader. However, taking an active part in your business transition and actively seeking the advice of financial professionals may increase your chances of success.

Ascend Investment Partners is not a legal or tax advisor. You should consult with your attorney, accountant and/or estate planner before taking any action.    Ascend Investment Partners did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Ascend Investment Partners or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy   Services offered through Kesler, Norman & Wride, LLC dba Ascend Investment Partners, a Registered Investment Advisor. This message and any attachments contain information which may be confidential and/or privileged and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message.  If you do not wish to receive marketing emails from this sender, please send an email to garrett@ascendinvestment.com    Please note that trading instructions through email, fax or voicemail will not be taken. 

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