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Business Transition Planning FAQs

Prepare for the future by implementing a business transition plan.

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Why do I need a formal business transition plan?
A formal business transition plan puts the goals, priorities and strategies in place for a successful transition. Without a clearly defined plan, business owners are leaving their personal and financial future to chance.

I'm not sure I'm ready to transition out of my business. How do I know when the time is right?
Transitioning out of your business is all about setting and reaching goals. Have you accomplished what you set out to do with your business? Do you have dreams of doing things other than running your current business?

I know my business better than anyone else. Why shouldn't I handle the transition plan and process myself?
This is a complex and personally challenging process. It's very difficult to do it alone and get it right. If you have legal, tax or issues, you must use professionals familiar with these areas to take care of them.

Who are the experts on a transition team?
Depending on what phase you are currently in, any of the following may be involved: CPA, Certified Financial Planner (CFP), business consultant, business broker and banker.

Why do I need a transition team?
You will transition out of your business. You need experts in every area to help you get the most cash for your business. Using a transition team will cut down on the enormous amount of time you would otherwise have to spend planning, marketing, talking, negotiating and working to find a potential buyer-who might end up walking away. Unless you have been through a merger, acquisition or divestiture, transition planning and execution are unlike anything you've ever done before.

Why shouldn't I hire an investment banker to handle this transition?
There is no national firm that handles every aspect of this transition, and if you have cost issues, you should do a comparison

Where can I find these experts?
Even if you have an , broker or financial advisor, they may not be uniquely qualified to assist you with the transition. You need experts focused on business transitioning. There are firms, such as The Monitor Group and its Transition Team, that can work with you to identify the best choices for each expert. To find experts who deal extensively with business transitions, seek recommendations from your accountant, lawyer or broker, or try a local trade association in your industry.

What information do I need to prepare for my transition?

  • Financial documents:
    • A minimum of five years of financial documents
    • Audited financials for three years
    • Pro-forma sales and cash flows for two years out
    • Three years of taxes
    • Company insurance documents
    • Personal financial information (account statements, complete copies of federal and state tax returns, estate documents)
  • Customer lists (shows history of longevity)
  • Vendor lists and relationships
  • Operational systems and procedures for everyone and every part of your business
  • Legal corporate documents
  • Contracts with vendors, suppliers, customers and clients
  • Intellectual property rights and assets

What if I have already completed some parts of the process?
Experts can become involved at any point of your transition. These experts can review the work you have completed, provide recommendations and take the necessary actions to get you on the right track. Even if you have completed your transition, a certified financial planner can help with wealth management.

How do I get started?
The four phases of proper business transition planning are:

  1. Pre-Sale Phase
  2. Positioning for Sale
  3. Transaction Phase
  4. Wealth Management

Following the above Four Phases of a Successful Business Transition, use the following process to guide you through your transition.

  • Data gathering (documents you need to begin)
  • Initial Expert Team Consultation
  • Selection of your team
  • Creation and Execution of the Transition Plan. (typically a 6-month to 5-year timeframe)
  • Successful completion of the transaction
  • Wealth management system put in place for a secure financial future

The Monitor Group has been in business for over 20 years, helping companies successfully complete business transitions.

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