Financial advisors can play a central role in succession and exit planning by applying the same principles they use in core financial planning, without needing to become technical exit specialists.
Advisors should help owners understand the importance of a written plan, clarify their ideal exit timeline and priorities, explore exit paths, and coordinate resources and adjacent professionals to help owners prepare.
1. Identify their role in succession & exit planning.
Focus on core planning principles to guide owners through succession & exit decisions without having to become specialists in value optimization, technical exit modeling, or deal strategy.
2. Educate clients on the importance of a succession & exit plan.
Every business owner will exit their business someday, but only a fraction have a written plan. Similar to personal financial planning, show clients the importance of having a written plan to engage in the succession & exit planning process.
3. Identify client exit priorities & ideal timeline.
As with all financial planning, it's important to gain an understanding of the client's goals and timeline. Identifying exit priorities and ideal timeline should be closely integrated into personal financial planning, as each will have critical impacts on future cash flow and tax considerations.
4. Explore exit paths & develop a plan.
Help owners understand the options they have available at a high-level. Compare transitioning to family, transitioning to their team, and selling to a third party to the client's exit priorities and life goals to assess level of alignment.
5. Identify action items and coordinate resources.
Once a high-level exit path has been identified, create next steps to help the owner increase their personal and business readiness for an exit. Coordinate with adjacent professionals and specialists as needed to help the owner add detail and tactics to their plan.
6. Track progress and maintain accountability
Similar to personal financial planning, exit planning should be an ongoing exercise that is revisited annually leading up to the exit period and then more frequently as the exit approaches.
With the most significant transfer of private business wealth in history underway, business owners are turning to financial advisors to help them prepare for and navigate this critical moment in their financial lives.
The fundamental responsibilities of a financial advisor is to help educate their clients, clarify their priorities, create a plan that aligns with their goals, provide them resources, and help them stay on track.
The same applies in succession & exit planning.
Applying the same principles of personal planning creates real value leading up to and during one of the most important chapters of their client's life.
For business owners, succession & exit and personal financial planning have quite a bit of overlap. How and when an owner exits their business is both informed by and has meaningful impacts on retirement planning, tax planning, estate planning, and risk management considerations.
💡 Do advisors need exit specialist designations?
Some advisors may choose to adopt more specialized roles and designations to help with items like valuation optimization or business consulting, technical exit modeling, and deal strategy.
For advisors that prefer to maintain focus on core financial planning services, collaborate with these types of specialists as needed is an effective approach. Most owners will only need this level of specialized knowledge in key moments and circumstances.
By playing this role of "quarterback", advisors can focus on their core competencies, bring new value to their clients, and avoid investing in specialist training and certifications.
Every business owner will exit their business someday, in some fashion. However, only a fraction of business owners have a written succession & exit plan.
Similar to personal financial planning, show clients the importance of having a written plan to inspire them to engage in the planning process.
A written plan is about surfacing and documenting what's most important to the client, which outcomes matter most, and how it will be achieved. A written plan also acts as an alignment mechanism that helps owners and their team of professionals stay aligned leading up to and throughout an exit.
Discuss with owners why a written succession & exit plan is important:
Similar to educating clients on personal financial planning services, outline the steps and process you will take clients through so they feel confident in the path forward.
Succession & Exit Planning Process
| Steps | Example description for clients |
| 1) Identify ideal exit timeline |
To start we will explore how an future exit fits aligns with your personal financial goals. To identify your ideal exit timeline we will consider:
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| 2) Identify exit priorities |
Next, we will identify what is most important to you during a future exit. To identify your exit priorities we will consider which of the following is most important to you across:
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| 3) Explore exit paths |
With an ideal exit timeline and clear exit priorities, we'll compare the unique upsides and considerations for each of the following exit paths and identify which aligns most with your priorities:
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| 4) Action items & resources |
Based on the path that aligns with your goals, we'll identify the key milestones, action items, and resources you need to prepare for exit including:
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| 5) Monitor & update plan |
We will revisit your succession & exit plan often to account for changes in your goals, ensure all stakeholders are aligned, and track progress on key preparations. |
As with all financial planning, it's important to gain an understanding of the client's goals and timeline. Identifying exit priorities and ideal timeline should be closely integrated into personal financial planning, since an exit can represent a significant liquidity event in the owner's portfolio.
Identifying exit timeline requires considerations for the client's:
Advisors that explore these areas with their clients will open opportunities for deep personal financial planning that considers the central role the business plays in the owner's life plan.
Although identifying exit priorities may be a new exercise for advisors typically focused on core financial planning, the same principles of uncovering owner goals applies.
Each exit path an owner can take has different characteristics that will impact their lifestyle, wealth, and community.
For this reason, it's important to frame conversations in a way that drives clarity using "trade-offs" or ranking exercises.
💡 Use trade-off exercises to drive clarity
If you asked an owner: "How important is getting the highest proceed potential from exit?"...
Almost all would respond "Very!".
Asking: "Is it more important that you get the highest proceed potential or that you have control over the timing and terms of your exit?" yields a more meaningful and insightful conversation.
Framing exit priority discovery as a discussion of trade-offs uncovers which elements of an exit the owner is willing to sacrifice and which are the most important. This should be done across all the key characteristics of an exit including proceed potential, control, legacy & continuity, and level of involvement in the business after exit.
Ask owners to rank the following potential exit priorities to open meaningful conversations in this area:
See the table in the next section for a breakdown of how each of the high-level exit paths scores across these priorities.
Most owner's don't realize there may be a range of exit options available to them. Once the owner's ideal timeline and exit priorities are clear, help them understand what is possible and which paths align best with their identified exit priorities.
Compare transitioning to family, transitioning to their team, and selling to a third party to the client's exit priorities and life goals to assess level of alignment.
Use the tables below to help clients identify which exit path makes sense for them at a high level.
Exit Path Overview
| Exit Path | Common structures | Key considerations |
| Transition to Family Prioritizes legacy and business continuity through family with great opportunities for tax optimization. However, this path tends to have the lowest total proceed potential and owners may struggle to step away after exit completely. |
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Transition to Team |
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Sell to a 3rd Party |
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Exit Path Comparison
| Characteristic | Transition to Family |
Transition to Team |
Sell to 3rd Party |
| Proceeds potential The maximum liquidity the owner may realize after taxes and fees from that exit path. |
🔴 Low |
🟡 Moderate |
🟢 High |
|
Legacy |
🟢 High |
🟢 High |
🔴 Low |
|
Business continuity |
🟢 High |
🟢 High |
🟡 Moderate |
| Control The level of control the owner has over the timing and terms of the exit. |
🟢 High |
🟢 High |
🟡 Moderate |
| Ability to step away The likelihood the owner will be able, if desired, to step away completely from the business. |
🔴 Low |
🟡 Moderate |
🟢 High |
Once a path is identified as highly aligned with the owner's priorities, detail can start to be added to the plan by identifying next steps and coordinating specialist and adjacent professionals to help with deal structure, tax optimization, and business consulting as needed.
Once a high-level exit path has been identified, create next steps to help the owner increase their personal and business readiness for an exit.
💡 Playing "quarterback" to coordinate other professionals
As mentioned previously, advisors that want to focus on core planning services should collaborate with specialized professionals to help with items like valuation optimization or business consulting, technical exit modeling, and deal strategy.
By playing this role of "quarterback", advisors can focus on their core competencies, bring new value to their clients, and avoid investing in specialist training and certifications.
Once an owner's exit timeline, priorities, ideal path, and liquidity goals are identified, advisors can coordinate specialized resources as needed to help the owner.
Since preparing the business usually takes center stage, personal readiness items often get overlooked when guiding business owners through exit planning. This creates an opportunity for financial advisors to differentiate themselves, help owners feel confident, and reduce the likelihood clients feel dissatisfied or overwhelmed with their exit decisions.
Personal Readiness Action Items
The range of work to prepare the business for an exit will vary case to case and is dependent heavily on exit path. In the event the owner wants to sell, detailed preparations will need to be made to ensure the business is ready for diligence, transition, and is its most marketable. In other cases, business preparations may focus on ensuring the least amount of disruptions to operations and strengthening leadership.
Common Business Readiness Action Items
💡 Avoid acting as a business consultant or project manager
Advisors should avoid unintentionally adopting the role of business consultant or valuation optimizer when helping owners understand the key next steps and milestones for preparing for an exit.
Guidance on how to optimize and grow business value or implementing strategic projects to prepare the business should be delegated to a specialist or adjacent professional.
This will ensure the advisor can focus on core planning principles and their relationship with the client.
Similar to personal financial planning, exit planning should be an ongoing exercise that is revisited annually leading up to the exit period and then more frequently as the exit approaches.
When meeting with clients to review their plan, advisors should:
The three most common are:
Transition to Family: prioritizes legacy and continuity, but lower proceeds
Transition to Team: balances proceeds, continuity, and owner control
Sale to 3rd Party: often maximizes liquidity, but with less control and continuity
Exit timing and potential proceeds directly affect future cash flow, retirement funding, and wealth transfer. Advisors should integrate succession & exit planning into the broader financial plan to ensure continuity and alignment with client goals.
