Guiding Your Business-Owning Clients During Their Exit


If your client is an owner of a business, how they exit their business is likely the most significant financial decision they will ever make. For some, this looks like reaching retirement and passing the baton. For others, they may still be in their 30’s or 40’s and actively looking for their next investment opportunity. 

Whatever the circumstance, maximizing the value of the sale is a key (albeit specialized) aspect of their financial plan. While there is a notable difference between a financial advisor and an exit planner, here are a few key conversations that are worth having with your clients planning the sale of their business.

When your client navigates this decision well, it maximizes the value of their asset for themselves, their family, and their community.

Read: WealthPlan Group launches value accelerator program for business owners with David DeCelle.

Question 1: Are they ready to sell your business? 

There are a number of reasons an owner would be ready to stop running their business. They may be ready to retire or move on to another focus. The sale price may enable their next venture. The process of selling a business is intensive, and it’s essential to have a clear view of why they are making the effort. It also will give them a clearer compass to guide their decisions along the lines of sale price, timeline, and transition preparation.

The bottom line: you need a new sense of purpose on the other side of the sale.

Question 2: Is their business ready to be sold?

Clarity in this area is harder to come by than many owners assume. This question isn’t just a matter of whether or not your client is ready for their next chapter. It’s a matter of whether their business is ready for the next chapter without them.

This is the area where expertise in exit planning is most important. For starters, your clients need an accurate view of the current value of their business to inform their decision. Even if the initial answer here is disappointing, it’s critical on the way to achieving a successful outcome. That’s because many owners are chasing revenue and margin growth, but they aren’t focusing on the factors that dictate valuation, such as:

  1. Transition preparedness
  2. Owner dependence
  3. Client concentration
  4. Client/revenue retention during a sale

Your client will only achieve a maximum multiple if their business is positioned to maximize the value to a buyer. These rules are more specific and nuanced than just margins. With a little bit of time and intentionality, crafting an intentional exit plan can help their asset preserve its value under new leadership.

Question 3: Defining a Successful Sale

What defines a successful sale for your client? This becomes a critical decision on a personal level. While exploring their options, your client should reach a clear definition of success in areas like:

  1. The dollar amount and structure of the deal
  2. Impact on stakeholders (like family members, employees, and customers)
  3. Any desired offramp – such as an employment contract with the new buyer
  4. Net gain after taxes

That way, you can help them achieve a clear set of criteria along the lines of, “I don’t want to sell my business unless…” With help from an exit planner, this clarity can be invaluable.

Question 4: Financial Planning After the Sale

This is where your guidance as their financial planner is essential. A large lump sum of money is a dangerous thing without a clear plan that aligns with their values and goals. It’s helpful to address questions like:

  1. Clear plans for sale proceeds – where will the money go and why?
  2. Establish an income stream – prepare for to part ways with your salary and profits.
  3. Anticipate tax liabilities – your business likely owns assets as well, each to be categorized by tax implication
  4. Healthcare planning – if they sell before age 65, it may impact their Medicare eligibility
  5. Revisit estate planning – this is a massive financial event, and their estate planning needs to be updated to match
  6. Consider charitable giving – if this is a priority for your client, it is helpful to discuss pre-sale

Maximizing Your Value as an Advisor

In the world of financial planning, few decisions are more important than selling a business. You are in a unique position to help them plan ahead and make a purposeful decision.

This is the driving reason why WealthPlan Group has developed a Value Accelerator program with certified exit planner David DeCelle. Equip your clients with the key voices they need to make the best decisions. If you have business-owning clients considering a sale, we invite you to connect with David and explore the value that can be added.

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