Managing your personal wealth after leaving a closely held business

Business owner financial planning: Define goals, approach holistically

Sep 21, 2021

You’ve invested your time, resources and passion in your business. Now, with the decision to either transition ownership or to sell your company, are you confident that the wealth you’ve built will address your needs into retirement? How do you know if you have enough money to take care of your family, pursue your pastimes, support your charitable causes and maintain your lifestyle? 


The following considerations can help guide you during business succession financial planning, regardless of whether your wealth is primarily tied to the sale of your business or to a portfolio you’ve built for retirement.

It starts with questions and your specific answers

Establishing your personal wealth goals requires some introspection from you. It’s important to understand and determine your core capital requirements—the capital needed to support your lifestyle needs and wants, in addition to your estate and charitable goals. The following questions should be a part of your business succession financial planning process:

  • What will be the emotional and financial impact of transitioning the business to family members versus selling to employees or a third party?
  • How much is your business worth, and will you have enough money post-sale to support your needs and wishes and take care of your family?
  • What will selling the business mean to you, and how will you spend your retirement or post-sale life?
  • What steps are necessary to prepare your business for sale and monetize the return on your investment?
  • Are there specific tax considerations and obligations to address, and how will these concerns affect your wealth planning efforts?
  • How about your legacy? Will there be enough to leave money for your heirs and charitable interests?

Find your personal chief financial officer (CFO)

Wealth planning is a complex strategy, with many moving parts and variables. You may think you have a solid wealth management strategy in place, and then, an emergency occurs. A sudden financial need happens, and your plan must pivot. You need advisors who can help you anticipate the "what ifs." Your team may include an accountant, private banker, corporate tax advisor, life insurance agent, wealth advisor, lawyer and more. All may provide reputable guidance in their field and be well-meaning in their advice to you, but some may be isolated from others on the team, and because of this, their guidance may not be fully optimized.

What’s critical to your team is a lead professional – a personal CFO – who can provide that holistic view of your entire wealth strategy. Similar to the role of the CFO at your company, this professional understands your entire financial position. Your personal CFO knows your vision and also works with the entire team across the various specialties to move toward your wealth goals. This will allow your team of advisors, with the connection and oversight of your personal CFO, to work cohesively for you. Whether it’s a professional wealth management advisor or another professional, make sure you’ve selected a lead advisor who is receptive, is a great listener, works in tandem with your other financial professionals and can synthesize the complexities of your planning.

The right time is now

Is there an optimal time to begin your wealth planning, particularly in relation to your business succession efforts? Most advisors will tell you your personal wealth planning should be part of your business strategy from the very beginning, but this specific planning often becomes a secondary focus. Business owners frequently are entrenched in daily operations, and suddenly, 20 years later, the time is right to sell or transition to family members. Is it too late at this point to think about tomorrow and the wealth needed to fund the next stages of life? Certainly not, but don’t delay any further. If selling your business is imminent, now is the time to either assess your current wealth management plan or begin planning today with your advisory team. They can help you work through your challenges, timeline and needs.

Wealth planning and preservation can be a challenging effort, but being mindful of your specific goals and selecting the right team to get you where you want to be is a promising start.