Transition Planning For The Next Phase Of Your Business

Written by: Andrew Jason

Every business owner’s to-do list is long. There are urgent items that must be addressed now, and others that fall to the bottom as priorities change. One important — but critical — task that often gets pushed down the list is planning and making investing decisions for the transition out of business ownership and into retirement. Brad Kelley, Principal-in-Charge of Financial Services at Eide Bailly, has some thoughts on why business owners are not prioritizing planning for life after they exit ownership of their business.

“There are a lot of moving parts, and for many, it feels overwhelming to put structure in place today for the future, especially when the daily tasks of running your business continue to stack-up. You can’t just wake up and say, ‘I think I’m going to sell my business today.’ You really need a runway of five years to start preparing, so you can take it in pieces. If you take it in pieces and you plan over a period, it becomes more manageable to handle.” Essentially, it comes down to unifying all those moving parts under a plan with the future in mind.  

At Eide Bailly Financial Services, Kelley and his team focus on helping business owners understand their unique planning needs and implement investment and insurance strategies. “For a lot of clients we help, we’re solving problems, we’re looking at where they are today and forecasting where they can be in the future,” said Kelley. “Our CPAs document what has already happened in a client’s life while our team works to illustrate how decisions made today will impact their future.”  

What’s unique with Eide Bailly Financial Services is that they are positioned to seamlessly collaborate with the numerous other business consulting and accounting professionals at Eide Bailly, providing one place to handle every aspect of a company’s financial needs. Working with Eide Bailly enables clients to build a cohesive, comprehensive team dedicated to helping them accomplish their professional and personal goals.

The Transition From Owner To Retiree

A significant part of the work Kelley is doing now involves succession planning, the “what’s next” when it’s time to exit the ownership of a business. A survey in 2016 indicated that 54 percent of business owners intended to sell their businesses in 10 years. Retiring baby boomers account for most of these transactions.

Business owners do not have the luxury of walking away from a job when their pension payout is maximized, or their 401k balance is large enough. “Retirement for a business owner must be finessed out of a web of decisions he or she makes in the years preceding their eventual separation from ownership,” Kelley said.

Transitioning away from owning a business and into retirement can be an intimidating scenario. “There are so many decisions that need to be made far in advance of the actual transaction that will have a significant impact on the future of an owner’s life after exiting the business,” said Kelley. While thinking about the future and next steps, “they’re still running the business and dealing with the day-to-day operations and dynamics around that.”

As an advisor, and with other professionals related to a business succession, “I work with the business owner to help them understand the options that are available to smoothly transition to the next phase of their life. At Eide Bailly, we take personally the commitment to listen and understand what a client wants and provide plans that help them achieve their objectives.” No plan is ever the same. A business owner must consider, among other things, how to reach the right value of the business, how to find a buyer and who that buyer will be, how to structure the transaction and what to do with the proceeds once the transaction is complete. 

“Retirement for a business owner must be finessed out of a web of decisions he or she makes in the years preceding their eventual separation from ownership.”  Brad Kelley, Principal-in-Charge of Financial Services at Eide Bailly

“Then the person is also dealing with the move from a business owner to a wealth manager, where the wealth that was in their business is now sitting in cash. It creates a number of questions for them: ‘How do I now manage that? How do I generate income to sustain my lifestyle? How much do I need? How much do I pass on to the next generation?’”

It doesn’t end there either. Selling a business is also an emotional affair for many owners. Most business owners have spent the majority of their life with their company and it can be hard to give it up. Kelley and his team are there to help clients through that journey, and those decisions and moments often forge the relationships that Kelley says make his job rewarding. 

“For us, it has always been about putting the client first and doing what’s best for them. They begin working with us at various stages of their life and we step in to meet the client where they are and guide them through the tremendous decisions and changes they will encounter. It is so rewarding to know that the planning you do with a client provides them with direction and clarity, resulting in them achieving their dreams.” 

Lasting relationships are born from this process. Over his 30 years in the business, Kelley has numerous stories of creating that personal connection with his clients. 

“Today, I’m traveling to meet with clients who recently sold their business. That’s a process we’ve been working on for a couple of years now. … It’s really fun, rewarding and gratifying to help somebody work through that transition. When I go there today, we’ll have our meeting and then when we’re done, we’ll go to their new lake home and then out to dinner. It’s the relationships that you build with people that’s the most meaningful.” 

Eide Bailly Financial Services 

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Financial Advisor offers Investment Advisory Services through Eide Bailly Advisors LLC, a Registered Investment Advisor. Securities offered through United Planners Financial Services, Member of FINRA and SIPC. Eide Bailly Financial Services, LLC is the holding company for Eide Bailly Advisors, LLC. Eide Bailly Financial Services and its subsidiaries are not affiliated with United Planners.

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