Creating a transition plan


"If you fail to plan, you are planning to fail.” 

This is a quote by one of our founding fathers, Benjamin Franklin, and it is still relevant today. It is our experience that most entrepreneurs do not have a formal plan to ensure they maximize the value of their business. We also find of the business owners who have put plans in place, many do not consider how to maximize their post-sale personal wealth. 

The end goal for many successful entrepreneurs is to be able to sell their business when they are ready for the next stage of life. Often, an entrepreneur's business is the bulk of their net worth. Being able to sell it successfully not only validates the owner’s life work, but also allows them to enjoy the fruits of their labor with a substantial influx of cash.  

Many entrepreneurs spend a small fraction of time on creating a plan to exit their business.  

The most important step that gets overlooked is putting a formal transition plan in place for transferring ownership of a business. A formal plan is designed to structure the company (and its employees) for the firm’s eventual sale to new owners. A transition plan can maximize the sale price as well as the health and continuity of the company itself and its key employees. 

A transition plan should have two components: Corporate Exit Planning and Personal Wealth Planning.  


Business owners often fail to plan because of lack of time and the feeling that now is not the right time to start preparing. 

Without a plan these owners may sell for far less than what the business is worth or be unable to sell it at all. It is important to think about your exit the same way you would building your business, which is in a thoughtful and systemic way. 

The transition plan should have steps and be concrete. Business owners who create transition plans are more prepared and focused.   

Some of the most common steps to take are:

  • Update financial statements.  

  • Establish proper financial processes and controls. 

  • Ensure that assets, intellectual property, and trademarks are protected.  

  • Develop or increase recurring revenue. 

  • Address any outstanding issues that may stall a sale, especially tax-related. 


You may have put in place the process to maximize the sales value of your business. The next step is to maximize the dollars that go into your pocket from the sale.  

Being proactive by planning in advance is crucial. It’s not at all uncommon for business owners who are weeks or days away from a sale to start asking about estate and other taxes—at which point they generally are told that it’s too late in the process.  

It takes all the elements of corporate exit planning and includes a central focus on family wealth to achieve optimal results.  

Some, but not all, proactive steps to consider taking on the personal wealth side include:

  • Engaging in retirement, tax and estate planning and stress test those plans to see where issues may arise that could derail your plans.   

  • Transferring ownership out of an estate to children over several years, which if done properly can reduce estate taxes. 

  • Use trusts to mitigate the impact of capital gains taxes or future estate taxes.  


As explained in the book “Good to Great,” you need to get the right people on the bus.  

Exiting a business can be complex and has many moving parts; you want skilled professionals who can help you maximize the final after-tax value. A key component is the financial planner. A good financial professional can help you get the right people on the bus and coordinate the moving parts while integrating the sales proceeds with your personal financial plan.  

You want a plan for that so you can live the life you desire.  

Additional team members would include but are not limited to: an attorney, accountant, valuation expert (may or may not be your accountant or attorney) and a corporate tax specialist (may or may not be your accountant). 


If you plan on selling your business, consider taking the time to lay down the foundation and consult with your professional advisors to create a transition plan. Doing this will help position you for the best opportunity to maximize your sales price and your post-sale wealth.