5 steps business owners can take to ensure a good transition

By David Grau Jr.

Purchasing a business, especially from a family member or mentor, takes time and a willingness to have awkward conversations. The transition plan needs to include discussions on price, payment terms, tax structure, timelines and roles.

It is also important for business owners to do the following:

1. Well before you are ready to retire and have your successor take over, actively work to position your successor not as a subordinate, but as a peer.
2. Catalog everything you do, including non-client activities such as handling lease issues, managing financials, and dealing with insurance and human resources issues. Work side-by-side with your successor on these before closing the deal, so they know everything it takes to run the business.
3. Know when it’s time to step away. Put a deadline on it. If there’s no timeline, there will be some awkward conversations ahead.
4. Make sure all stakeholders are considered, including junior advisors and children outside of the family business. It’s unfortunate, but money can divide a family like nothing else.
5. Bring in a third-party specialist who can have an unbiased perspective on the value of the business, the payment terms and your role after the transition.

Grau is the president of Succession Resource Group, a succession planning consulting firm that specializes in working with financial advisors. See more in the Round the Table article “What successors need to know.”