Rothstein Kass Survey: Pre-Exit Planning Key to Family Business Owner Satisfaction After Selling Company

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Key Pain Points Include Lack of Planning, Unfamiliarity of Sales Process and Lack of Coordination Between M&A Advisors

Rothstein Kass (, a leading national professional services firm, today published “More Planning, Greater Success,” a report exploring the key factors contributing to the satisfaction of former business owners after the sale of their companies. The study of 116 ex-business owners of small to middle-market companies found that only one in ten former business owners (10 percent) were highly satisfied with the process of selling their company, and more than half (54 percent) were dissatisfied. Each highly satisfied owner moderately to extensively engaged in pre-exit corporate and personal planning, indicating that owners who integrate financial planning and wealth management are not only happiest with the sales process, but also best positioned to receive the highest potential acquisition price for the company and gain more personal wealth.

“For these business owners, the decision to sell represents a once-in-a-lifetime opportunity with lasting repercussions on the overarching wealth and wealth management strategy of both the individual owner and his/her entire family,” said Tom Angell, Principal-in-Charge of the Rothstein Kass Family Business Practice. “Paramount to the sale, and ultimately the sales price, is the sales process. But knowledge of how it works isn’t inherent, which is why the number one priority of a business owner looking to sell must be to extensively and meticulously prepare. With this in mind, our family office practice developed a four step ‘Pre-Exit Corporate Planning Checklist’ that helps business owners learn the sales process, prepare an exit strategy, get all advisors on the same page and take the vital steps to structure and position a company for sale. The benefits of this planning strategy are apparent in the highly satisfied owners who have maximized sales prices and significantly increased their personal wealth.”

The majority of business owners polled (60 percent) reported having no knowledge of the sales process prior to the experience, a contributing factor to the high dissatisfaction levels. As a result of the lack of familiarity with the sales process, and a lack of planning, more than three-quarters of respondents (77 percent) reported a lack of coordination between their team of advisors as the primary reason keeping them from being highly satisfied with the sales process.

“The main two reasons former business owners cited for not being highly satisfied with the sales process – not working as a team and advisors being unresponsive – are both easily preventable with two things: early due diligence of the wealth management group and the use of, what the industry has coined, a “quarterback,” who serves as a team coordinator,” said Rick Flynn, Principal and Head of the Rothstein Kass Family Office Group. “Business owners deserve customized treatment and care during what can be the most stressful period of their lives, and it’s the responsibility of their advisors to serve as their rocks and guides.”

Yet corporate planning and sales process familiarity are not the only components to a successful sale, as the most important factor to an individual owner’s happiness is often the income they acquire. While only 8 percent of respondents were dissatisfied with the price received for the company, nearly a third (30 percent) were dissatisfied with the personal wealth gained from the sale. This disparity results from only one-third of respondents (37 percent) reporting having engaged either moderately or extensively in pre-exit personal financial/tax planning, compared to the half (53 percent) who partook in moderate to extensive pre-exit corporate planning.

“If any pre-planning occurs, it’s most frequently done on the corporate level, as business owners often times get wrapped up in the business sale,” said Flynn. “But equally important is personal financial and tax planning, because in business sales, maximizing after-tax proceeds is key. Many advanced strategies exist that can greatly increase the business owners wealth by mitigating capital gains and decreasing future estate taxes, to name a few. But having been in this industry for years, we know many of these money-saving strategies must be put into place before a sale, which is why personal planning is always worth the extra time.”

For a copy of the full “More Planning, Greater Success” report, please contact Meredith Jones at mjones (at) rkco (dot) com.

About Rothstein Kass:
Founded in 1959, Rothstein Kass is a premier professional services firm serving privately-held and publicly-traded companies, as well as high-net-worth individuals and families. With more than 1,000 professionals, the firm provides accounting, advisory, auditing and tax services, as well as a full array of integrated services such as litigation and forensic consulting and concierge and tax accounting to clients across industry spectrums and in all stages of development. Rothstein Kass is widely recognized as a leader in the financial services space, consistently ranking among the top CPA firms serving the Hedge Fund, Private Equity, Venture Capital, Broker Dealer and Family Office segments.

At the core of Rothstein Kass’ remarkable success is a commitment to hiring, developing and retaining employees with the same entrepreneurial spirit that permeates the sophisticated business and financial services communities the firm serves.

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Kathleen O’Toole
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