Dollar Transition

Boomers Rewriting History In Business Succession

that is outdated or has remained rigid despite significant changes in circumstances surrounding the business and business owners.”

Start Simply, But Simply Start

Wellendorf said it is important for business owners and their professional advisors to understand there are two elements at work when starting a succession plan and without both being satisfied, little will get done. Therefore, he gauges his clients’ readiness both from a financial and an emotional perspective.

“The financial readiness of the owner seems the most obvious,” he said. “Rolling along and hopefully reviewing the value of the business every year, or sustaining the value of the business, financial readiness seems to be at the forefront of their minds.

“On the emotional readiness, I talk to the owner. Obviously, they have been running this business for many years, it’s given them routine, but also it’s giving them purpose, it’s giving them impact, they’re enjoying being challenged. I ask them, ‘Which of those will you miss and how can we continue to provide that at a time that you no longer own the business?’”

Once business owners overcome the mental and emotional hurdles that often hamstring succession planning, the most important initial questions to ask are the most basic.

“At a foundational level, the most important question to ask is what is the primary objective for the business owner?” DeLuca said. “Is it preserving or maximizing business value? Ensuring generational business longevity? Preserving family harmony in a family-owned business? Do tax objectives come above all else? There will certainly be multiple, sometimes competing objectives. However, it’s important to keep the foundational goal front and center.”

The process continues from this central goal as the plan starts to take shape. Again, it’s helpful to start with the fundamental questions and work into the more intricate details, Scheef said.

“When designing a succession plan, business owners need to ask themselves, ‘Who is our ideal purchaser and how can I best communicate our value proposition to decision-makers?” he said. “Whether the business is being sold to a family member, key employee or friendly competition, it is vital to know that the next generation of ownership is truly interested.