Your Money: Exit a business or equity position without regret

Bruce Helmer and Peg Webb For multiple productive entrepreneurs longtime employees with stock options or heirs to a family business the biggest financial decision of their lives is often not how to grow their wealth but how to unlock it At Wealth Enhancement we often work with clients who have spent decades building value in a privately held business or have accumulated notable equity through an employee stock ownership plan ESOP incentive stock options or inheritance For these clients the decision to sell the business or diversify out of a concentrated equity position is not just financial it can be highly emotional And when it s handled without foresight it can lead to profound regret The emotional complexity of selling Here s a surprising statistic of business owners regret selling their business within one year of the sale according to research by the Exit Planning Institute That s not because the sale went poorly In a multitude of cases it s because the seller didn t know what they needed after the sale They lacked a plan for what was next in life or what to do with the money That regret isn t limited to business owners It also shows up in long-tenured employees who ve accumulated large company stock positions and in individuals who inherit ownership in a family enterprise When you ve spent years or generations identifying with the company you ve built worked for or inherited the exit can feel like losing part of your identity So how do you avoid that sense of loss How do you ensure that what could be a once-in-a-lifetime liquidity even leads to opportunity not uncertainty Begin with the end in mind One of the the bulk powerful tools in triumphant transitions is a concept borrowed from the late Stephen Covey Begin with the end in mind One of The Habits of Highly Effective People Start by clarifying your wealth mission a report of your goals values and vision for what you want this money to accomplish Whether you hope to retire encouragement a cause invest in a new venture or pass wealth down to future generations this mission can help guide your decisions from a place of purpose not just numbers Ten keys to a no-regrets exit Our colleague Paul Brahim CFP CEPA a specialist in advising company leaders and wealthy families on business exit strategies has identified key strategies to help business owners employees with equity and inheritors plan for a confident and regret-free transition Start early and define your why Ask yourself What s next Whether it s more time with family or launching a nonprofit the clarity of that vision will shape every decision that follows Get the timing right Don t wait for perfect industry conditions but don t rush either Review your financials align with personal goals and assess buyer interest or vesting schedules Know your numbers Understand what a buyer sees in your company Get professional help to assess your financials and valuation Get a formal valuation Use multiple approaches asset-based income-based and market-based to determine a fair range Build a strong leadership band Whether you re selling or stepping away continuity matters Buyers and boards want to see that the business can run without you Prepare emotionally Selling or stepping back can be surprisingly laborious Be honest about the emotional impact and plan for it Assemble the right advisory crew You ll likely need a CPA financial adviser estate attorney and possibly a business broker or transaction expert Communicate clearly Whether it s employees family members or co-owners manage expectations with transparency and empathy Focus on transferable value Strengthen operations reduce owner dependence protect intellectual property and increase recurring revenue to boost valuation Plan for life after the sale A large liquidity event is not the finish line it s the starting point of the next chapter Work with a financial adviser to map out how to invest diversify and sustain income for the long run Considerations for equity-rich employees and heirs If you ve built up company stock through an ESOP or options over a long career now could be the time to plan Diversification becomes especially critical as retirement nears Similarly if you ve inherited a stake in a family business it s essential to clarify ownership rights valuation and long-term governance with your advisers and family members In both cases too much of your financial future may be riding on one company It s wise to consider tax-smart strategies to gradually diversify your holdings Life transitions require reflection and sometimes advice Exiting a business or unwinding from a concentrated equity position is not a simple transaction It s a life transition The difference between regret and confidence often comes down to planning early asking the right questions and surrounding yourself with the right people So if you re thinking about making a move whether it s selling the company exercising options or passing ownership to the next generation recognize that you don t need to go it alone There are professionals who do this work each day and who can bring great insight and experience to the process Related Articles Your Money What to do with a financial windfall Your Money The pursuit of happiness Your Money The biggest mistake people make with money Your Money What octogenarians want you to know Your Money Your future is counting on you The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of Your Money on WCCO AM on Sunday mornings Email Bruce and Peg at yourmoney wealthenhancement com Advisory services offered through Wealth Enhancement Advisory Services LLC a registered resources adviser and affiliate of Wealth Enhancement Group