Selling a business is often framed as a transaction: A valuation, a deal structure, a number on a page. But, in reality, it can be one of the most significant transitions an entrepreneur will ever face.
While valuation, deal structure and tax outcomes are key considerations, they are just part of the equation. The emotional, familial and lifestyle implications can be just as consequential.
All of these factors should be taken into account during the upcoming wave of anticipated exits. According to the Exit Planning Institute, roughly 75% of business owners plan to sell within the next decade, representing an estimated $14 trillion expected to change hands.
Yet only 20% to 30% of businesses that go to market actually sell.
Addressing this gap requires a more integrated approach, which changes the expectations placed on advisers. In many cases, the adviser role extends beyond transaction support into guiding clients through a sequence of financial and personal decisions that unfold over time.
By acting as a coach, advisers can help business owners by providing continuity and direction throughout a process that is both technically complex and personally consequential.
An adviser's role starts quite early in the process, commencing with how "readiness" is defined.
Start with readiness
Wanting to sell and being ready for a sale are two very different things, and preparation extends well beyond the business itself. True readiness often involves aligning financial strategy with personal priorities, long-term goals and life after the transaction.
Often, it comes down to two questions:
- Is the business ready for a sale?
- Does the owner understand why he or she is selling?
From a business perspective, readiness should be relatively straightforward: Clean financials, operational scalability and a credible growth story.
However, from an owner's perspective, it can be much more complex. It involves understanding what the sale is intended to accomplish and what comes next.
Advisers often frame this as balancing "economic alpha" with "life alpha." Maximizing valuation certainly matters, but there also should be clarity about the next phase.
Without that clarity, even a well-executed exit can feel incomplete or unsatisfying, potentially straining relationships. Owners who have spent decades building something often find themselves asking a difficult question once it's gone: What now?
Assemble the right team
Most entrepreneurs only sell a business once, which makes assembling the appropriate team of professionals one of the most important decisions in the process.
A typical deal involves a wealth adviser, an M&A attorney, an investment banker and an accountant. Each plays a discreet role, from structuring the deal, to managing negotiations and mitigating tax impact.
However, isolated expertise isn't enough. The team should operate in alignment. When communication breaks down or priorities diverge, friction quickly builds.
Accordingly, effective teams tend to function as a unit — anticipating challenges, coordinating decisions and keeping momentum intact when the process becomes complex.
Plan for the proceeds
A liquidity event can often create sudden wealth, which, depending on how it's handled, can potentially lead to fulfillment or a void. Effective plans start with clear requirements and goals. Proceeds are typically allocated across three areas:
- Lifestyle needs
- Philanthropy
- Wealth transfer
It's key that advisers account for how clients want to live post-sale, whether that involves more travel, hobbies or other meaningful experiences. Without that level of intentional planning, many business owners struggle with a loss of structure once the demands of running the business disappear.
Philanthropic strategies, such as donor advised funds (DAFs), should reflect genuine convictions and the family's broader values, rather than being driven solely by tax considerations.
Wealth transfer is often more nuanced. The most complex decisions often involve children, including when and how to introduce wealth in a way that supports independence, rather than undermines it.
These discussions with the next generation can shape family dynamics for years. Done thoughtfully, it may help reinforce independence. Done improperly, it can create lasting tension.
Prepare for the emotional roller coaster
At some point, the tone inevitably shifts. Once a letter of intent (LOI) is signed, control begins to change hands. Due diligence introduces scrutiny. Negotiations can become more adversarial.
It's often difficult for entrepreneurs to go from building a business to suddenly defending it in terms of valuation and financials.
Separating personal identity from the business takes time, which is why exit planning may work best as a multiyear process. And it's important to note that the emotional complexities don't typically end when the deal closes — they simply evolve.
Post-sale, owners face new questions around purpose, time and relationships. As wealth increases, its marginal value tends to decline. In its place, concerns arise around health, connections and how the client's time will be spent — areas commonly overlooked during the deal.
Execute pre-sale planning strategies
Preparation before the sale can meaningfully impact the outcome. Strategies such as gifting shares into trust structures ahead of a liquidity event may reduce tax exposure by leveraging discounted valuations.
Family limited partnerships can also facilitate wealth transfer, while allowing owners to retain some control.
But these approaches come with trade-offs. Without clear communication, they can create confusion or tension around access and fairness.
Concentration risk should also be considered, since many owners have most of their net worth tied up in the business.
Interim solutions, like term life insurance, may provide protection leading up to the transaction.
Avoid the common post-sale mistakes
When the deal closes, many owners initially increase spending, especially on physical assets like vacation homes, cars or other hobbies. But this phase typically doesn't lasts.
Within a few years, priorities tend to shift. Instead of acquiring more physical assets, many sellers focus on experiences, relationships and how they spend their time.
Without a clear plan, that transition can feel disjointed. A disciplined approach to investing and spending may help support long-term sustainability.
Family dynamics can also become strained if wealth is introduced too quickly or without context. Preparation, once again, is beneficial.
The deal is done, and the real work begins
A business exit tends to compress a wide range of decisions into a relatively short period of time. Once that process is in motion, the focus naturally shifts toward execution, and there is less room to revisit the broader questions that emerge alongside the transaction.
For advisers, that makes the timing of engagement important. The work that often has a meaningful impact often takes place earlier, when clients can approach decisions around tax strategy, capital allocation, family dynamics and personal priorities with more perspective and fewer constraints.
Bringing those elements together requires coordination across disciplines and a willingness to operate beyond the immediate demands of the deal.
In that context, an adviser can play the role of a coach, helping business owners through the peaks and valleys of the dealmaking process and the unfamiliar terrain that comes with it, from both a financial and personal perspective.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
