facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Retiring Soon? Here Are 5 Tips to Getting Started With the Business Transition Process! Thumbnail

Retiring Soon? Here Are 5 Tips to Getting Started With the Business Transition Process!

Business transition planning is a strategy that allows the preservation of the value of the business after it has changed hands. Read on to see how it works!

Maintaining a company's value after it has changed hands is tricky, but this strategy will lighten the load.


Here are some tips to keep in mind if you want to maximize the return on your investment as you prepare for retirement. 

Tip #1: Evaluate Your Market Potential

Take a long, honest look at your business and the broader economic climate when estimating your chances of a successful transition. Consumer confidence in your community, region, or industry may influence the future value of your business. It may also be helpful to note the growth of your enterprise versus the industry overall. Additionally, doing this early and long before you hope to transition your business may help reveal the potential for future growth.

Tip #2: Prepare Your Business

Next, look for anything that may delay or negatively impact the transfer of your business. This may include an evaluation of your personal and business tax returns by a financial professional as well as a review of any potential local or state tax issues. If you have a business presence in multiple states, this may also help avoid potential tax issues. 

Now is also an ideal time to contact a tax professional if you're thinking about restructuring your business for tax purposes. They may be able to help you navigate the potential drawbacks and highlight any benefits that may result from a restructuring.

Tip #3: Do Your Due Diligence

If your business’s financial documents aren’t up to date, now is the time to remedy that. 

Standard documents to check could include:

  • incorporation documents
  • equity ownership records
  • meeting minutes
  • tax classification records

If you do have equity holders, do you know whether they are entitled to a right of refusal? Additionally, if your business owns any intellectual property, are you certain it has been properly registered? The answers to these questions may have considerable implications for your transition plan.

This is also the time to start thinking about your existing business relationships. Existing long-term contracts or distribution agreements may need to be evaluated as well. 

Tip #4: Include Your Employees

At some point in your plan, it may be helpful to share your transition strategy with those you employ. Have answers ready for some tough questions, as you should prepare to be as transparent as possible. Securing employee buy-in can be a powerful element in your strategy that can lead to essential conversations with those you trust most. 

Remember, your business isn’t the only thing that is going to change through your transition. The livelihood of your employees and their families will be impacted as well, meaning it’s important to allow them to voice their concerns. Creating a safe space for open conversations may help alleviate their worry.

Tip #5: Ask For Help

If you’re like most successful entrepreneurs, you already have a dedicated team of professionals to help your business. In addition to the CPAs, insurance agents, or wealth managers you may already utilize, a business attorney and an attorney who specializes in estate planning may be valuable additions to your team. 

Choosing one key individual or “transition czar” to lead the group may also be a smart move. Consider designating a single point of contact who can help with the coordination efforts and clear up confusion during the transition period.

Remember, it’s okay if you’re unsure which steps to incorporate into your transition plan first. Just like your business, managing your transition is a team effort; you can’t just rely on a single leader. Our team at California Retirement Advisors is dedicated to ensuring that you are prepared for retirement in every facet of your life, especially when transitioning out of your company. Speaking to one of our qualified advisors will give you the peace of mind to make financial decisions that you are confident in. Feel free to contact us today to speak with one of our licensed advisors.

By Christian Cordoba
Founder, California Retirement Advisors

Investment advisory services offered through Mutual Advisors, LLC DBA California Retirement Advisors, a SEC registered investment adviser. Securities offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Securities, Inc. and Mutual Advisors, LLC are affiliated companies. CA Insurance license #0B09076. This content is developed from sources believed to be providing accurate information and provided by California Retirement Advisors. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. California Retirement Advisors, nor any of its members, are tax accountants or legal attorneys and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional.