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Business Succession Planning Guide for Owners | Protect Your Legacy

How to Protect Your Legacy and Your Family’s Future

Owning a business is more than a career, it’s years of hard work, risk and commitment. Business succession planning helps you decide what happens next, so you can protect your family, support your employees and preserve the legacy you’ve worked so hard to build.

What is business succession planning?

Business succession planning is the structured process of transferring ownership and leadership of a business to new owners or management, typically due to retirement, sale or unexpected events. It connects your business continuity planning as an owner with your broader personal financial plan.

A well-designed succession plan can help you:

Realize the full value of your business
Create long-term financial security for you, your spouse and your family
Provide stability for employees, customers and your community

A survey found that 45.9% of family-owned companies don’t have a formal succession plan.*

Why business transition planning should start now

The best time to start planning for succession is when you start your business. The next best time is today. Waiting until you are “ready” to retire can limit your options and create unnecessary pressure for you and your family.

Planning ahead gives you time to:

Increase the value of your business before a sale or transition
Explore options such as family succession, employee buyouts or third-party sales
Coordinate tax, estate and risk planning in a thoughtful, intentional way

How Your Personal Financial Plan Shapes Business Succession

A strong succession plan begins with a clear personal financial plan. Before deciding how to transition your business, it helps to first define what you want life to look like afterward.

Key questions to consider include:

Retirement lifestyle: Where do you want to live, and how do you want to spend your time?
Family: What level of financial support do you want to provide to children, grandchildren or loved ones?
Giving: Is philanthropy or charitable giving part of your legacy?
Taxes and estate planning: How important is tax efficiency and wealth transfer?
Risk management: What risks—health, longevity, market or business—do you want to protect against?

Your personal financial plan becomes the roadmap for your business exit. It helps determine how much value you need from the business, the right timing for a transition and how different succession options affect your family.

70% of family businesses fail during the succession to the next generation.**

Build your transition planning team

Business succession planning brings together legal, tax, financial and emotional considerations. Having the right advisory team makes all the difference.

Your team may include:

A Certified Public Accountant (CPA) to assist with tax strategy and financial reporting
Estate planning and business attorneys to structure ownership and update documents
A financial planner or wealth manager to align the transition with your retirement and investment goals
A business valuation expert and M&A advisor or investment banker to estimate value and guide a potential sale
A corporate banker and trust company to support financing, liquidity and long-term estate needs

When your advisors work together, they can help reduce surprises, avoid costly missteps and keep your plan aligned.

Business Succession Planning Timeline: 10 Years to Exit

Thinking about succession planning in stages can make the process more manageable.

5–10 years out: Laying the foundation

Several years before stepping away, focus on clarifying goals and preparing both your personal finances and your business.

Identify your preferred outcome: a family transfer, management buyout, Employee Stock Ownership Plan (ESOP) or third party sale
Coordinate your advisory team so everyone understands your goals
Assess business readiness, including operations, financials and management depth
Identify value drivers and risks, such as customer concentration or owner dependence
Refine your personal financial plan, including projected cash flow after a transition
Begin integrating estate planning strategies, such as trusts or gifting plans

2–5 years out: Preparing for ownership transfer

As your target date approaches, the focus shifts to making the business more attractive and transition-ready.

Strengthen earnings and diversify revenue
Build a management team that can operate without you day-to-day
Document key processes and systems
Clean up ownership issues and update shareholder or buy-sell agreements
Evaluate internal transition options, such as an ESOP or management buyout
Obtain a preliminary business valuation to identify gaps and opportunities

6–24 months out: Executing the succession plan

In the final stage, planning becomes action.

Finalize your succession path and prepare key stakeholders
Organize financial, legal, HR and compliance materials for due diligence
Engage transaction-focused advisors, including an M&A advisor and experienced legal counsel
Optimize deal structure and timing to help manage taxes
Develop a post sale wealth plan for investing proceeds, charitable giving and family governance

Planned and unplanned business transitions

While many owners plan for a smooth retirement or sale, not every transition is expected. A strong succession plan addresses both scenarios.

Planned transitions may include:

Passing the business to family members
Selling to employees or management
Partner buyouts under a buy-sell agreement
Selling to an outside buyer, such as a strategic acquirer or private equity firm

Unplanned transitions may include:

Death or disability of an owner
Economic disruption or regulatory changes

In unplanned situations, priorities include:

Keeping the business running and preserving value
Providing leadership to replace the owner
Protecting the family’s financial security

Tools such as life and disability insurance, well-designed buy-sell agreements, documented leadership plans and access to experienced advisors can be critical.

Why agreements and valuations matter

The details in shareholder agreements, buy-sell agreements and ownership structures can significantly affect what your family ultimately receives.

For example, court decisions have shown that life insurance owned by the business may be included in the company’s value for estate tax purposes, potentially increasing the taxable estate and changing outcomes for heirs.

That’s why it’s important to:

Review buy-sell and ownership agreements regularly
Understand how business-owned insurance and assets are structured and valued
Ensure your succession, tax and estate plans work together

Creating a succession plan for business owners

With time, a clear personal financial plan and a coordinated advisory team, you can approach your transition with confidence. Our wealth management and business banking teams can work alongside your CPA, attorneys and valuation experts to help you:

Clarify your goals and timeline
Prepare your business and personal finances for transition
Put structures in place to protect your wealth and legacy

If you’re starting to think about succession planning, now may be the right time to begin the conversation. Start your business succession planning today by connecting with our wealth management and business banking team.

Dr. John Molster, CFP®, AEP®

Director of Financial Planning, AUB Wealth Management

John has over 30 years of experience leading investment, financial planning and insurance organizations. He holds a doctoral degree from Wilmington University and a master’s degree from Saint Joseph’s University. John is a Certified Financial Planner™ practitioner.

*The Succession Planning Gap. Kreischer Miller

**Family Succession Crisis. Deal Flow Agent

Atlantic Union Bank Wealth Management is a division of Atlantic Union Bank that offers asset management, wealth banking, and trust and estate services. Securities are not insured by the FDIC or any other government agency, are not deposits or obligations of Atlantic Union Bank, are not guaranteed by Atlantic Union Bank or any of its affiliates, and are subject to risks, including the possible loss of principal.

Atlantic Union Bank Wealth Management advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. All expressions of opinion reflect the judgment of Atlantic Union Bank Wealth Management and are subject to change at any time.