As a business owner, you’re likely too busy taking care of day-to-day operations and planning how to grow your company to spend a lot of time looking at possible exit strategies. As a result, you may find it hard to see how closely decisions about succession planning are intertwined with considerations about current strategy and personal wealth planning. Yet your business probably makes up the lion’s share of your personal net worth, and the steps you take now to secure the financing you need to grow and build its value could help ensure that you can fund your retirement and other personal financial goals later on. This means that thinking about how you’ll ultimately leave the business may influence current plans.
If you’re thinking about selling the business now or later, any potential buyer will want to know that your current results are sustainable, repeatable and accurate. In addition, creditworthiness matters: Many of the succession options available to you require some amount of debt financing that will rely on the ability of your company to repay. All the actions your company might take to maintain access to debt financing are likely to be the same steps that would increase its value for a sale, says Jason Miller, National Executive, ESOP Solutions Advisory at Bank of America.