Business Owners: How to prepare for that Uncomfortable Family Thanksgiving Day conversation.

November 2018

If you are a Baby Boom Business owner you have either already had this conversation with your family or have been avoiding it for years.

If you were among the small percentage of owners prepared for this conversation you most likely decided years prior to engaged in some form of succession planning. This possibly led to a formalized plan or even better…get this… A successful Transition or Exit.

The key here is simple to grasp.

The proactive nature of your planning, whether fully executed or not, helped put to rest your fears and concerns regarding the future of your business, your family, your employees and your retirement. Well, that accounts for possibly two people sitting around the diner table, how about the rest of the crew.

Since you are the successful business owner in the family, and you are probably hosting the feast, this crew consists of your brother, sister, children, grandchildren and your elderly parents. Lets address some of their individual concerns and how your planning helped make this Thanksgiving diner a stress free event.

We will make the following assumptions to support this discussion.

1. Five years ago you engaged an exit-planning specialist who worked with you and your advisory team (lawyer, accountant, financial planner and banker) to craft an exit strategy providing the means for a comfortable retirement scenario for you and your spouse five years from now.
2. This strategy identified a few glaring holes in attaining your ideal scenario which include:

– Insufficient projected savings at retirement age (70) without business income to sustain a comfortable lifestyle and to anticipate for elder care till age 85.
– A business valuation revealed that the business value if sold today was insufficient to bridge the gap between retirement savings and projected lifestyle.
– An employee census concluded that your workforce is aging and the majority of which will retire during the next fifteen years leaving a glaring leadership/talent vacuum in its wake.
-Only one of your three children (age 35) is actively involved in the business and she currently doesn’t feel either prepared or willing to assume the responsibility of business ownership. She has been working in your business since college and balances work with a growing family.
-Your business is currently very profitable but you have been drawing cash annually to sustain your lifestyle rather than investing for your retirement needs.
-Growing the business hasn’t interested you in years. New customers are more difficult to find, investing in new technology expensive and finding qualified employees close to impossible.

3. These new revelations were always in the back of your mind but didn’t really concern you until you approached your late fifties. Putting out fires and satisfying customers always came first, finding a way each month to pay those mounting tuition bills a close second and hitting the gym a distant third.

Your successful succession planning engagement identified two strategies which if properly executed could meet your goals. Each would take 5-10 years to execute and either would alleviate most of the concerns of each guest at your Thanksgiving feast.

Your spouse has been worrying about the future of your business longer than you have. These concerns include, the toll on your health, having enough savings to retire, and being fair to the children regarding inheritance.

Your brother and sister have been concerned about the toll on your health and your penchant for spending excessively on your children and grandchildren. They know this can’t possibly continue without your business picking up the tab.

Your elderly parents are enjoying a comfortable yet frugal retirement relying on their company pension, social security and Medicare for subsistence. They still live in your childhood home. You help out with the property taxes and maintenance. They know you don’t have a pension to rely on but are confident you will figure things out.

Your children are busy raising their families but have individual concerns. Your daughter is concerned about her future livelihood since she has devoted over 10 years of her prime earning years to the business and doesn’t own any equity. She doesn’t know anything about your personal finances and is assuming that mom and dad will have enough saved to live comfortably without the business but at what lifestyle. Your sons live locally and are both raising growing families. All the children enjoy summers at your lake house with family and you enjoy hosting them. Your children are silently concerned about your health and what may happen to the family if you are suddenly gone.

Now on to either plan A (Stay, Grow, Sell then Go) or plan B (Stay, Sell, Stay then Go)

You Chose plan B.

The essential elements of plan B will require between five and ten years to execute and also may last longer if necessary.

Stay- You commit the next five years of business operation to achieving the following goals. Each will lead to greatly increasing the transferability and ultimate selling value of your business.
1. Cleaning up your books. Depending on the nature of your business every new dollar transferred from lifestyle income which will now appear on your bottom increases your ultimate selling price by $3-5 dollars. Invest the remaining profit in your advisor recommended retirement portfolio.
2. Address the longevity of your workforce. A potential strategy here may be to identify a smaller younger competitor, followed by an engineered synergistic merger. You may instantly gain a few new customers, some younger employees and a willing qualified general manager. If your daughter is interested in staying in the business, maybe put her in charge of identifying the merger target and engineering the deal.
3. Eliminate any or all of the identifiable risks that may be associated with owning your business. These risks may include: Customer concentration, an aging workforce, maintaining unprofitable business, and general misallocation of resources. Your goal here is to be capable of validating the highest selling price possible with identifiable sustainable benchmarks.


1. Set the wheels in motion by becoming active in marketer your business for sale. Related activities may include attending or exhibiting at trade shows you normally skip, becoming more active on a civic level, or promoting you business in ways that may not impact the bottom line but increase your name recognition.
2. Consult with your Succession Planning team on the best avenue for successful sale, whether to a local competitor, private equity group or other synergistic buyer.
3. Negotiate a consulting agreement for your last five years of active employment and or maintain some fraction of equity. Don’t forget your daughter’s concerns during this negotiation.
4. Assume that the buyer acquired your company because they intend to grow it further. You may be pleasantly surprised that they wish to keep you along at least for some of the ride. If they intend to kick you to the curb…ask for more value at closing, legal assurances or liquid collateral in return
5. Spend more time at the gym.

Go- You might think this is self explanatory, but don’t forget to make a plan for your life after business. We will save that subject for another installment.

Back to Diner…five years from completing the transition.

Your spouse is smiling because your planning has mitigated most of the controllable uncertainty regarding life after 70.

Your brother and sister are happy because you are looking forward toward retirement and have set realistic expectations and achievable goals. They also look forward to visiting the lake house.

Your elderly parents are content to watch you once again enjoying work, are happy to see you working closer with their grand daughter and are excited about her future as well.

You children are happy to by enjoying the holidays without the fear of confrontation usually stemming from the uncertainty concerning business and life after business.

In Closing:

If you are a Baby Boom Business owner haven’t had this conversation with your family and have been avoiding it for years. Please enjoy this years holiday season knowing that in 2019 you will reveal your plan.

Step#1 Begin this journey by meeting with a qualified Business Exit Planning Consultant prior to years end.

Best Regards,
Eric Bratt
Business Legacy Strategies