10 Ways to Check if you are Ready for a Business Transition

What does ready mean? How do we define ready?
Below is a set of 10 simple statements to help owners determine what they need to accomplish to be prepared or “ready” to transition their businesses. Use this as simple checklist.  You are “Prepared” or “Ready” to transition your business if you…

❏ Have spent some time and money getting educated on the process of how to transition your business. You have discussed transitioning with your loved ones.
❏ Your personal, financial and business goals are aligned meaning they are
defined, co-dependent, and linked.
❏ You have created an advisory team which includes at minimum: an attorney, CPA, wealth or financial advisor, exit advisor, spouse or partner or other family who is a “significant other” in your life. Other advisors that may be included: personal friends and advisors, banking advisor, M&A attorney,
estate planning attorney, real estate attorney, business attorney, ESOP
specialist, tax specialist, insurance specialist, foundation / charity, key
employees, investment banker or business broker, board members, family or
personal counselor.
❏ You have created a contingency plan which should include buy-sell
instructions, appropriate insurance, and specifies what should happen if
before you transition something was to happen outside of your control that
would prevent you from operating your business or unwillingly force you to
transition. You have reviewed this plan with your trusted advisors including
family members and/or partners if applicable.

❏ You have a completed a strategic analysis, business valuation and personal, financial and business assessment(s) within the last year.
❏ You have considered all of your exit options and optimum deal structure and
weighed the pros and cons of each in relation to your stated goals and
❏ Your transition plan is written and includes goals and objectives, clearly
defined tasks and accountabilities, definition of your transition team,
definition of your transition process, a plan leader or project manager,
timelines, a budget and your role before and after transition. This plan ideally
has a multi-year implementation timeline.
❏ You have considered and designed a post business life-after plan. This plan is linked or part of your wealth management plan which has been prepared by a professional financial advisor and if applicable, estate planning attorney, insurance specialist, tax specialist and charitable foundation specialist.
❏ You have a pre-transition value enhancement / preliminary due diligence
project underway to de-risk the business, maximize its value, minimize taxes
upon transition and improve the probability of a smooth transition to the next owner including family, partners, or employees if applicable. Family
transitions should be treated no differently than other transition options.
This plan ideally has a multi-year implementation timeline.
❏ You have a management program underway to ensure the post transition
leadership is prepared to operate the company after you exit and secured the appropriate specialists to handle your desired transition option.

Daniel L. Bishop CFP© CEPA©

Daniel L. Bishop is a Advice-Only Comprehensive Financial Planner that has experience in education funding from cradle to career: His deep expertise is in optimizing Late Stage College Funding into a Master Financial Plan for people with complicated situations, like business owners who are nearing retirement and need to prepare for a business exit on their own terms. He founded Black Swan Advisors LLC in 2016, so that he could pursue his passion of real, honest, financial planning advice for families. He loves working virtually with clients across the Heartland of America. Daniel and his wife modernized a century-old, lakefront farm house in southern Illinois. After work, you can often find tpaying with their 2 kids, preferably in the water.