Connections for Success



Family Businesses: Choosing the Right Exit Strategy  
Frank L. Washelesky

If you own a family business, it is likely one of your largest assets and it might be the most difficult to monetize. How you handle it can have a significant impact on your overall retirement and estate plans.

There are a number of different exit strategies for a family business, including transferring to the younger generation, selling to your company’s management team or to an employee stock ownership plan, or selling to a third party. The best option depends on several factors, including your financial resources, your retirement goals and your family’s interest in taking over the business.

Eying the future

Before you formulate a strategy, it is important to consider your retirement needs.  You will need to estimate what your annual cash needs will be during retirement, while considering your other sources of income and whether you will wish to continue working for a certain period after exiting the business. Having a professional perform a Monte Carlo analysis can provide a clearer picture of the potential risk of outliving your other assets during retirement. If your other assets are not sufficient to meet your retirement needs, you may need to consider an exit strategy that provides the best cash return to support you through retirement.  

You may also want to work with a professional to get an idea of what your business is currently worth, strategies that could increase value and make the business easier to sell or transition. Only then can you determine how its value fits into your personal and financial retirement goals. These inquiries will help you determine whether a transfer to family members is financially viable or if it is necessary to explore other options.

Another factor to consider is whether your children, other family members or your management team are willing and able to take over the business. If not, a sale to a third party may be the only option that maximizes the value you and your family derive from the business. This is particularly important if you will continue to rely on the business for income after the sale.


If you have decided to sell your business, when is the right time to do so? The answer depends in part on your personal goals and in part on external factors. For example:

  • Do you plan to work until the traditional retirement age or later, or do you anticipate an earlier exit?
  • What is the likelihood that health issues will force you to pull the trigger earlier?
  • How do you expect current conditions in your industry to change between now and your anticipated retirement date?
  • Are there opportunities to enhance the value of your business before you sell?

The greater the value of your business, the greater the chances your exit strategy will be successful. You may want to stay past your original retirement date to increase the company’s value, even if that takes a couple of extra years. For instance, you might evaluate your management team and hire new talent or provide additional training to address leadership weaknesses. “Professionalizing” the business by strengthening governance practices, removing yourself from certain processes and establishing appropriate internal controls, or appointing independent board members can increase value.

Related Read: The Pros and Cons of Selling Your Business

Start planning now

Planning your exit from a family business is a complex undertaking. But one concept is simple: The earlier you start planning, the greater your chances of success. Start by assessing your current financial situation, setting your personal and financial retirement goals and determining how the business fits within those goals. Only then can you begin to identify the optimal strategies for executing your plans and laying a foundation for a successful transition.

For more information, contact Frank Washelesky at [email protected] or call him at 312.670.7444. Visit to learn more about our Wealth Management Services.

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