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The Business Owner Exit–Succession Process

Cypress Wealth Services

April 2021

When you first got that spark of an idea to start a business or create a service or product, it’s not likely you spent much time thinking about how and when you’d transition out of the ownership role down the road. But after the years of the blood, sweat, and tears that go into building a successful and sustainable business, all business owners must face decisions surrounding the final transition of their company.

But just thinking about it doesn’t cut it. Since every single business owner will one day transition their business at some point, advanced planning is critical to achieving their aspirations—both for their business and family. Unfortunately, less than 25% of business owners have established a formal written business succession plan. (*1)

This failure to plan is often due to two reasons. First, business owners are much better working in their business than on their business—as they should be. Second, the process of creating a proper succession plan can be difficult and overwhelming. This is where professionals can greatly assist owners by illustrating and implementing a clear and concise process from beginning to end.

Here’s a glance at what our team will cover in our stage-by-stage process.

Stage One: Initial Discovery Meeting

Defining exit objectives and goals:

  • Desired departure date?
  • Income/financial security requirements?
  • What exit route can I take?

Stage Two: Information Gathering

Personal financial analysis:

  • Review existing financial, estate, and business plans.
  • Determine gaps in each of these plans, if any.
  • Discuss wants and needs.

Stage Three: Determination of Business Value

Current valuation and the development of value drivers:

  • Analyze each exit route to determine how to protect and increase business value and understand the tax implications of ownership transfer through sale, gift, and estate.
  • Obtain a formal valuation performed by an independent third party to set a fair price for company stock based on a consistent methodology for valuing the stock in the future. Include a reasonable discount for lack of marketability and minority interest, if applicable. This provides a benchmark for buy-sell agreements, executive compensation equity-based plans, etc.

Stage Four: Choosing an Exit/Transition Route

  • Sell to an outside third party (financial or strategic buyer).
  • Sell to employees using an Employee Stock Ownership Plan (ESOP)*.
  • Sell the business to one or more key employees (management buyout).
  • Sell to remaining shareholders.
  • Transfer the company to family member(s).
  • Retain ownership but become a passive owner.

Stage Five: Implementation of Chosen Business Exit Route and Post-Transaction Servicing

  • Engage shareholders and the company to execute the chosen business exit route (external or internal sale or transfer).
  • Develop a contingency plan for the business (define key succession management, and be able to answer who will run the business in the event of a death or disability of current operational shareholders).
  • Develop a contingency plan for the owner’s family (financial, estate, and charitable planning).
  • Develop an ongoing servicing plan for the business and family (ongoing review to ensure that planning is being followed and to advise in the event of life changes within the family or succession management).

We’re Here to Help

Transitioning your business and relinquishing the reins will likely involve a mixture of emotions. As with any important business decision (and especially when it’s emotional), it’s wise to partner with a financial professional who can serve as an objective and knowledgeable third party. We at Cypress Wealth Services would be honored to help guide you through these decisions, the transition, and whatever comes next. To set up an introductory meeting, contact one of our offices today.


About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services is uniquely qualified to serve a broad range of client needs, and their experience and expertise act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With financial advisors in Palm Desert, CA, Tustin, CA, and Anchorage, AK, the firm serves clients across the country in Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit or call 760.834.7250.


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