Exit Planning

Future-Proof Your Business: The Guide to Early Exit Planning

Posted on October 23, 2025October 23, 2025 by thunder39

For many business owners, selling or transitioning their company feels like a distant event — something to think about “one day.” But in truth, the best time to start planning your exit is long before you’re ready to step away.

Early exit planning isn’t about deciding when to leave — it’s about building a business that’s ready when you are. It’s a proactive, strategic approach to maximize the value of your company, ensuring a smooth and rewarding transition when you’re in control. The more time you give yourself to prepare, the higher your likelihood of achieving a successful and rewarding transition.

Here’s what it means to start early, why it matters, and how to take the first step.

Why should I start exit planning so early?

Because most owners underestimate the time, complexity, and alignment needed to create a truly transferable business – one that thrives without you.

Exit planning is not an event — it’s a process. On average, it takes three to five years to properly prepare a company for transition. That window allows you to:

Strengthen your management team
Build consistent, recurring revenue streams
Improve operational systems and governance
Optimize financial reporting and visibility
Address personal and tax considerations

When started early, exit planning becomes value growth planning — turning your business into a more profitable, efficient, and attractive asset long before the transition occurs.

The high cost of waiting too long

Too often, owners delay planning until they’re emotionally ready to exit — by then, options are limited, and valuation may fall short of expectations.

Without proper preparation, you risk:

Over-Reliance on You: Your business becomes too dependent on your personal involvement, scaring off potential buyers.
Higher Perceived Risk: Buyers see inherent risk in a business that can’t function without you, leading to lower offers.
Missed Opportunities: Tax efficiency and deal structure opportunities vanish due to inadequate time and rushed decisions.
Lack of Leadership Succession: Successors aren’t ready to lead, jeopardizing the company’s future.
Suboptimal Terms and Liquidity: Being forced into accepting less favorable terms or selling at a discount.

Early planning gives you leverage, confidence, and time to make strategic improvements that protect both your legacy and wealth.

What does “starting early” actually look like?

The first step is understanding where your business stands today — and what investors, buyers, or successors will value most.

Rizolve Partners uses proven frameworks, such as the 24 Value Drivers and Certified Exit Planning Advisor (CEPA) methodologies, to benchmark your company’s current state and identify opportunities to grow transferable value.

The process includes:

Discovery & Assessment – Evaluate business quality, leadership, and readiness.
Goal Alignment – Clarify your personal, business, and financial objectives.
Value Growth Roadmap – Prioritize actions that strengthen performance and scalability.
Succession Preparation – Develop internal leadership or external transition options.
Execution & Accountability – Implement and track progress with advisory support.

Early planning isn’t just a financial strategy — it’s a strategic transformation that aligns your goals and every part of your business for future success.

When is the ideal time to begin?

Ideally, three to five years before your desired transition — though even earlier is better.

That timeline allows you to:

Establish Consistent, Recurring Revenue Streams: Diversify your customer base, pursue predictable revenue models (subscriptions, long-term contracts), and reduce reliance on individual clients.
Cultivate a High-Performing Management Team: Invest in leadership development, empower your team to take ownership, and create clear succession paths within the organization.
Streamline Operational Systems and Governance: Optimize processes, document workflows, implement clear accountability structures, and establish robust risk management protocols.
Enhance Financial Transparency and Reporting: Implement transparent accounting practices, generate accurate financial reports, and provide potential buyers with a clear picture of your company’s financial health.
Proactively Address Personal and Tax Considerations: Consult with financial advisors and tax professionals to minimize liabilities, optimize your personal finances, and ensure your long-term financial goals are met.
Prepare for a Range of Exit Paths: Sale, succession, management buyout, or recapitalization.

The earlier you start, the more control you have over timing, structure, and value.

Key Takeaways

Start exit planning 3–5 years before your desired transition.
Early planning maximizes value, control, and peace of mind.
Building a transferable business creates freedom and flexibility.
Having the right advisory team in place can provide the roadmap, structure, and advisory expertise to help you achieve your goals.

Learn more about our Exit Planning expertise here.

Reflection

Every business owner exits — the question is how well prepared you’ll be when the time comes.

Starting early means shaping your future on your terms, securing your financial legacy, and ensuring your business continues to thrive beyond your leadership.
If you’re asking yourself, “How do I start planning my business exit early?” — you’ve already taken the first step.

Ready to begin your exit journey?
Reach out to the Rizolve Partners advisory team at value@rizolve.ca to start your discovery session and begin building a business that’s ready for what’s next.

Business Exit Planning: The Canadian Owner’s Roadmap to a Successful Transition

Posted on July 10, 2025July 11, 2025 by RizAdmin

Introduction

Building a successful business is an incredible journey—but what happens when it’s time to move on? Whether you dream of retiring, pursuing a new venture, or simply securing the legacy you’ve worked so hard to create, having a solid business exit plan is essential.

In Canada, over 1.2 million small and medium-sized enterprises (SMEs) drive our economy, with many owners planning to exit within the next decade. Yet, only a fraction are prepared to transition their business successfully. Planning ahead isn’t just a good idea—it’s a strategic necessity to maximize value, minimize stress, and ensure your company is ultimately transferable into a Buyers control.

What Is Business Exit Planning?

Business exit planning is the process of developing a strategic roadmap for transitioning out of business ownership, whether through a sale, merger, succession, or closure. This plan doesn’t just help you “cash out”—it guides you in optimizing your company’s value, minimizing tax implications, and providing a pathway to achieving a successful handover for stakeholders and employees which addresses transfer issues.

Why Is Business Exit Planning Important for Canadian Owners?

Maximize the Value of Your Life’s Work: Most Canadian owners have 80–90% of their wealth tied up in their business. Exit planning helps unlock this value and secure your financial future.
Smooth Transition: A good exit plan ensures your business can thrive without you, protecting your employees, customers, suppliers and brand legacy after you have exited.
Tax Efficiency: Strategic planning minimizes tax burdens, leaving more in your pocket after the transition.
Reduce Risk: Sudden events—like death, disability, illness, disagreements, or market shifts—can force an unplanned exit. Preparation for transition creates a contingency plan that helps avoid suboptimal deals and stress.

“Only 20–30% of private business transitions are successful, mostly due to a lack of preparation.”

Understanding Your Exit Options: Internal vs. External

Internal Exit Options

Intergenerational Transfer (Family Succession)
Keep your business in the family, passing ownership and control to children or relatives. While many owners hope for this, only a third successfully complete a family transition. Success requires honest conversations, clear succession planning, and making sure the next generation is ready and willing.
Management Buyout (MBO)
Sell all or part of your company to your existing management team, who know the business and can finance the purchase using company assets.
Employee Ownership (ESOP)
Transfer ownership to employees through an Employee Stock Ownership Plan, which allows your team to buy shares—typically financed through company earnings.
Sale to Partners
If you have business partners, a buy-sell agreement can let them purchase your share. This is often called a “friendly buyer” arrangement and works best with strong legal agreements in place.

External Exit Options

Sale to a Third Party
Sell your business to another company (ideally a strategic investor able to drive synergies post transition), a financial buyer, or a private equity group. This route often achieves the highest sale price and lets you negotiate terms—but requires careful preparation and a competitive process.
Initial Public Offering (IPO)
List your company on a stock exchange, selling shares to the public. While lucrative for some, it’s rare among private Canadian businesses due to size requirements or high growth velocity, complexity, cost, and regulatory requirements.
Orderly Liquidation
Shut down your company and sell the assets. This is usually a last resort but may make sense if the asset value exceeds the value implied by the business’s ongoing earning power. However, costs of liquidation are a key consideration in the wind-up option.

Hybrid/Partial Exit Options

Partial Sale of Ownership
Sell a portion of your business to bring in outside investors while retaining some control and ongoing involvement and equity participation.
Recapitalization or Refinance
Restructure your company’s finances with new debt or equity investment—providing partial liquidity, reducing personal risk (taking “chips off the table”), or funding growth. The owner can sell a minority or majority interest without a full exit.
Strategic Partnership or Alliance
Form a partnership or alliance, gaining new resources and support without a full exit. This can set the stage for a future sale while you retain some say in the business’s direction.

Each path has its own pros, cons, and tax implications—making professional advice essential.

DID YOU KNOW?

According to the Canadian Federation of Independent Business, the most common exit paths are:

Sale to an unrelated buyer (49%)
Sale to a family member (24%)
Sale to employees (23%)

5 Most Common Exit Planning Questions

When should I start exit planning for my business?
Start early! Ideally, 3–5 years before your intended exit. Early planning allows you to build value, minimize taxes, and adjust or pivot when the unexpected occurs.
What are the main steps in a business exit plan?
1. Build your advisory team: Financial, legal, tax, and valuation experts.
2. Define your exit goals: Personal, financial, and business priorities.
3. Get a business valuation: Know your worth and areas for improvement.
4. Select your exit option(s): Tailored to your unique situation.
5. Prepare the business: Streamline operations, build leadership, and resolve outstanding issues.
6. Execute your plan: With ongoing support and accountability.
What happens if I don’t have an exit plan?
Lack of a plan often means rushed decisions, lower sale prices, tax surprises, and chaos for your employees and customers. Half of Canadian owners are forced into suboptimal exits due to illness, burnout, or external events
Which exit option is best for me?
The best option depends on your goals: Do you want maximum cash, to keep the business in the family, or to reward employees? Your timeline, family dynamics, and financial needs all play a role. An advisor can help you weigh your choices.
What’s involved in valuing my business?
A professional valuation looks at your financial statements, growth prospects, industry benchmarks, and value drivers. This helps you understand what buyers may pay and where to focus improvements. It’s crucial to understand that the Terms of the transaction are just as important as the Price itself. For sellers, getting advice on the likely terms ahead of a transaction is essential to navigate the process confidently and make informed decisions.

Key Takeaways

Start planning early to give yourself more options and negotiating power.
Identify all applicable exit paths—internal, external, and hybrid—and get advice on the right fit for you and your goals.
Get a professional valuation and optimize your business’s value drivers.
Build a strong advisory team with deep experience in Canadian business transitions.
Communicate transparently with employees, family, and stakeholders for a smooth transition.

Reflection: Have you considered what your life will look like after your exit your business? The right exit plan isn’t just about money…it’s about creating happiness, freedom, security, and an ongoing legacy you can be proud of!

Ready to Take Action?

Don’t leave your future to chance.
If you’re contemplating a transition or just want to know your options, Rizolve Partners is here to help. Our expert team specializes in helping Canadian business owners like you maximize value and ensure a smooth, stress-free exit.

Contact us today for a confidential exit planning assessment:
value@rizolve.ca | 416.840.5578

Final Thought

Business exit planning isn’t just about the end. It’s about setting your company—and yourself—up for the next great chapter. Start planning today and take control of your legacy and financial freedom.

Exit Planning is business strategy that focuses on establishing a transferable asset that is capable of ownership change. Key elements of this change are:

Focusing resources on delivering value growth;
Improvement in the quality of the business’ intangible assets; and
Reconciliation of the business, personal and financial goals of the Owner towards a common vision for satisfaction and happiness.

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The Psychology Behind Selling Your Business: What No One Tells You

Posted on June 26, 2025 by RizAdmin

For many entrepreneurs, selling a business is the culmination of years—sometimes decades—of hard work, sacrifice, and personal investment. It’s a milestone that should feel like a victory. Yet, for many business owners, the exit process is emotionally complex, often stirring up feelings of anxiety, loss, and even grief.

At Rizolve Partners, we’ve seen firsthand how the emotional side of exiting a business can be just as challenging as the financial and strategic aspects. Understanding the psychology of the exit is essential—not just for a smoother transaction, but for a healthier transition into life after the sale.

Here’s what you need to know:

1. Your Business Is Part of Your Identity

You’ve built something from the ground up. It’s more than a company—it’s a reflection of your values, your vision, and your legacy. So when it’s time to let go, it can feel like losing a part of yourself.

This sentiment is echoed by entrepreneur Jeff Giesea in his Harvard Business Review article, where he describes the emotional fallout of selling his business as “a kind of death.” His story is a powerful reminder that identity and ownership are often deeply intertwined.

Tip: Start separating your identity from your business early. Cultivate hobbies, relationships, and goals outside of work. This makes the transition less abrupt and more empowering.

2. The Emotional Rollercoaster is Real

Selling a business is rarely a linear process. There are highs—like receiving a strong offer—and lows—like due diligence stress or deal delays. But beneath the surface, there’s often a deeper emotional current: fear of the unknown, sadness over leaving a team behind, or guilt about stepping away.

Some owners even sabotage deals unconsciously, dragging their feet or raising last-minute objections. Why? Because emotionally, they’re not ready to let go.

In Entrepreneur, a recent article titled “How to Know When It’s Time to Sell Your Business — Before It’s Too Late” highlights emotional readiness as a key factor—right alongside financial metrics. Burnout, loss of passion, and the desire for a new chapter are all signs that it might be time to move on.

Tip: Work with advisors who understand the emotional side of the exit. A good advisor doesn’t just crunch numbers—they help you navigate the human side of the deal.

Feeling conflicted about your own future? We can help you prepare for what’s next. Let’s talk about where you are — and where you want to go.

3. There’s Rarely a “Clean Break”

Many owners imagine a clean break: one day they’re in charge, the next they’re free. But in reality, most exits involve a transition period—sometimes months or even years—where the seller stays on in a consulting or leadership role.

This can be both a blessing and a burden. On one hand, it eases the transition for employees and clients. On the other, it can prolong the emotional difficulty of stepping back.

Tip: Set clear boundaries and expectations for your post-sale role. Know when to step in—and when to step away.

4. Relationships Will Shift

Exiting a business doesn’t just affect the owner—it affects everyone around them. Spouses, children, business partners, and employees all experience the ripple effects.

Some relationships may strengthen, while others may strain. For example, a spouse might expect more time together post-sale, while the owner struggles with a lack of structure or purpose. Employees may feel uncertain about their future, leading to tension or turnover.

Dr. Subhash Chandar, writing for Forbes, notes that major leadership transitions often trigger emotional battles that ripple through teams and families. Selling your business is no exception.

Tip: Communicate openly with your inner circle. Share your plans, your fears, and your hopes. Transparency builds trust and eases the transition for everyone involved.

5. Beware The Post-Exit Void

One of the most under-discussed aspects of selling a business is what comes after. Many owners are so focused on the transaction that they don’t plan for life beyond the exit.

Without a clear sense of purpose, some experience what psychologists call “post-exit depression.” The structure, status, and stimulation of running a business are suddenly gone, leaving a void that’s hard to fill.

Giesea’s HBR article describes this as a “void” that many entrepreneurs aren’t prepared for. The key is to plan for what comes next—not just financially, but emotionally and mentally.

Tip: Start planning your post-exit life well before the sale. Whether it’s travel, philanthropy, mentoring, or starting a new venture, having a purpose is key to a fulfilling next chapter.

6. Redefine What Success Means

For years, success may have been defined by revenue, growth, or market share. But after the exit, those metrics no longer apply. This can lead to an existential question: “What does success look like now?”

Some owners struggle to find meaning outside of business achievements. Others discover new definitions of success—like spending time with family, giving back to the community, or pursuing personal passions.

Tip: Reflect on your values and goals. What truly matters to you? Use the exit as an opportunity to realign your life with your deeper purpose.

7. The Power of Preparation

The emotional challenges of exiting a business are real—but they’re not insurmountable. With the right preparation, support, and mindset, the transition can be not just manageable, but transformative.

At Rizolve Partners, we believe that a successful exit is about more than maximizing value—it’s about maximizing fulfillment. That means preparing not just your business, but yourself.

Tip: Engage in holistic exit planning. This includes financial, operational, and emotional readiness. The earlier you start, the smoother the journey.

Final Thoughts

Selling your business is one of the most significant decisions you’ll ever make. It’s a financial transaction, yes—but it’s also a deeply personal journey. By acknowledging and addressing the psychological aspects of the exit, you can move forward with clarity, confidence, and peace of mind.

Selling your business isn’t the end of your story—it’s the beginning of a new chapter. And with the right preparation, it can be your most rewarding one yet.

Key Takeaways:

Your identity is tied to your business — Letting go is more personal than most owners anticipate. The sooner you begin separating identity from enterprise, the better the transition.
Emotions can derail even the cleanest deals — Fear, guilt, and uncertainty are just as impactful as finances when it comes to executing an exit.
Post-sale roles blur boundaries — Most exits aren’t instant. A clearly defined post-sale plan helps reduce emotional whiplash and builds trust with the new leadership.
Relationships around you will change — From spouses to staff, everyone navigates your exit differently. Unspoken expectations are often the root of tension.
A lack of post-exit purpose can lead to regret — Many sellers aren’t prepared for the void. Life after the business deserves just as much planning as the sale itself.

5 Opportunities You Might Not Expect (But Should Plan For):

Redefine Your Identity on Your Terms – Your business has shaped who you are — but it doesn’t have to define you forever. The exit is your chance to reconnect with long-neglected passions, rediscover old interests, or finally explore the version of yourself beyond “owner.”
Harness Emotions as Strategic Signals – Fear, hesitation, and even guilt aren’t signs of weakness — they’re signs that the moment matters. Use them to spark honest conversations, align your decisions with your values, and ensure you exit for the right reasons, at the right time.
Design a Role That Works for Your Future – Most owners stay involved after a sale in some capacity — but when you shape the boundaries, it becomes a bridge to freedom rather than a trap. Think of it as your final opportunity to lead with clarity and influence.
Strengthen the Relationships That Matter Most – Transitions reveal what’s strong and what needs attention. By communicating your plans openly with your team and family, you foster trust, reduce uncertainty, and invite others to support you in the next chapter.
Create Purpose Beyond the Business – Exiting is not an end — it’s a reinvention. Whether it’s mentorship, investing, travel, or launching something new, you now have the freedom to choose a path with more meaning, impact, and alignment than ever before.

Reflection: Have you thought about who you’ll be when you’re no longer “the owner”? What will success mean to you then?

Thinking about your own exit? We’re here to help you plan not just the transaction—but the transition. Contact Rizolve Partners to start the conversation.

Family Business Succession Planning: Balancing Emotions and Strategy

Posted on May 20, 2025May 20, 2025 by RizAdmin

Succession planning in a family business is more than a financial or operational decision — it’s a deeply personal journey. Emotions, legacy, and relationships are tightly woven into the fabric of the business, making the transition process uniquely complex. Successfully navigating this shift requires a thoughtful balance between honouring family values and applying sound strategic planning to ensure long-term success.

Why Succession Planning is Challenging in Family Businesses

Unlike other organizations, family businesses carry emotional weight. Founders often see the business as an extension of themselves, and family members may have unspoken expectations about their roles in the future. These dynamics can complicate even the most well-intentioned plans.

Some common emotional challenges include:

Reluctance to Let Go: Founders may struggle with letting go of control or fear losing their identity post-retirement.
Family Dynamics: Differing visions, sibling rivalries, or generational gaps can create tension.
Unspoken Expectations: Assumptions about who “should” take over can lead to disappointment or conflict if not openly discussed.

Acknowledging these emotional layers is the first step toward a successful transition. It’s not just about passing the baton—it’s about managing change in a way that honours the past while preparing for the future.

Laying the Groundwork: Strategic Elements of Succession Planning

While emotions are real and valid, they must be balanced with clear, strategic thinking. A well-structured succession plan protects the business, supports the family, and ensures continuity. Here are the key components:

1. Start Early

Succession planning should begin years before an actual transition. This allows time to:

Identify and develop potential successors.
Address gaps in leadership or skills.
Prepare the business for valuation and potential sale, if needed.

Early planning also reduces the risk of reactive decisions during times of crisis or health issues.

2. Define Roles and Responsibilities

Clarity is critical. Clearly outline:

Who will lead the business operationally.
Who will own shares or equity.
How decisions will be made and disputes resolved.

This helps prevent power struggles and ensures everyone understands their role in the new structure.

3. Evaluate Successors Objectively

Choosing a successor should be based on merit, not just birth order or tradition. Consider:

Leadership capabilities.
Business acumen.
Alignment with company values and vision.

If no family member is ready or willing, consider external leadership while maintaining family ownership.

4. Separate Family and Business Governance

Establishing formal governance structures — such as a board of directors or advisory board — can help separate emotional decisions from strategic ones. Family councils or charters can also provide a forum for discussing family-related matters without interfering with business operations.

5. Address Financial and Legal Considerations

Whether the transition involves gifting shares, selling the business, or a hybrid approach, financial planning is essential. Key considerations include:

Tax implications.
Retirement funding for the outgoing generation.
Fairness among siblings or family members not involved in the business.

Working with financial advisors and legal professionals ensures the transition is both equitable and tax-efficient.

Preserving Legacy Without Sacrificing Progress

Legacy is a powerful part of any family business. It reflects the values, culture, and history that have shaped the company. But legacy should not become a barrier to progress.

Here’s how to honour the past while preparing for the future:

Document Core Values: Capture the principles that define the business’s identity. These can guide future decisions without dictating specific strategies.
Encourage Innovation: Empower the next generation to bring fresh ideas while staying true to the company’s roots.
Celebrate Milestones: Use anniversaries or leadership transitions as opportunities to reflect on the past and set a vision for what’s next.

Common Pitfalls and How to Avoid Them

Even with the best intentions, family business transitions can go awry. Here are some common pitfalls — and how to avoid them:

The Value of Outside Guidance

Bringing in external advisors can make a significant difference. They offer objectivity, experience, and a structured approach to what can be an emotionally charged process. Advisors can help with:

Business valuation and financial planning.
Leadership development and coaching.
Governance design and conflict resolution.
Exit strategies and deal structuring.

At Rizolve Partners, we specialize in helping family-owned businesses navigate these complex transitions with clarity and confidence. Our approach blends strategic insight with empathy, ensuring that both emotional and business needs are respected and addressed.

A Legacy Worth Leaving

Transitioning a family business is one of the most significant decisions an owner will make. It’s not just about who takes over—it’s about ensuring the business thrives for generations to come. By balancing emotional considerations with strategic planning, families can create a transition plan that protects their legacy and positions the business for continued success.

Whether you’re just beginning to think about succession or are actively planning a transition, remember: the best outcomes come from conversations that are both heartfelt and thoughtfully strategic.

If you’re beginning to think about succession or facing a complex transition, Rizolve Partners is here to help. Our experienced advisors specialize in guiding family-owned businesses through every stage of the journey—from planning to execution. Contact us today to start a conversation about your future.

The Hidden Costs Of Not Planning For Succession

Posted on February 4, 2025February 3, 2025 by RizAdmin

As a business owner, you’ve poured time, energy, and resources into building your company. You’ve faced challenges, celebrated successes, and created something meaningful. But have you stopped to consider what happens when it’s time for you to step away? Whether it’s due to retirement, unexpected life events, or simply a desire to focus on new ventures, the reality is clear: succession planning is not optional—it’s essential.

For many business owners, the thought of planning for succession is easy to delay. It’s often seen as a task for “later” or something to handle only when the need arises. However, failing to prepare for this critical transition can come with significant hidden costs, not only to the business but also to its stakeholders. In this article, we’ll uncover the risks of neglecting succession planning and explain why taking action today is the best decision for your company’s future.

What Happens Without A Succession Plan?

Succession planning is about more than deciding who will take over your role. It’s a comprehensive process that ensures your business can operate smoothly, maintain value, and thrive in your absence. When businesses lack a plan, the impact can be far-reaching:

1) Decline in Business Value

Your business’s value is not just tied to revenue or profit—it’s also tied to how transferable it is. Without a clear succession plan, potential buyers or investors may see your company as a risky proposition. A business that relies too heavily on its owner is less attractive, leading to reduced valuation and missed opportunities for growth or sale.

Businesses without a succession plan often sell for significantly less than those with clear transition strategies. In some cases, they struggle to sell at all.

2) Operational Instability

When key leadership roles are left vacant or transitions are poorly managed, it can lead to disruptions in daily operations. Employees may feel uncertain, clients may lose confidence, and the company’s overall performance can suffer.

Productivity drops and morale weakens as teams navigate the uncertainty of leadership gaps. Operational inefficiencies can arise, impacting customer satisfaction and profitability.

3) Lost Talent & Expertise

Without a clear plan in place, key employees may leave the company, fearing instability or a lack of future opportunities. This loss of institutional knowledge and expertise can hinder the company’s ability to recover and thrive.

Replacing experienced employees is expensive, time-consuming, and often results in a loss of momentum. High turnover rates can damage the company’s reputation and performance.

4) Legal & Financial Risks

Unexpected transitions—such as those caused by illness, retirement, or unforeseen circumstances—can result in legal disputes, financial mismanagement, or even the inability to meet contractual obligations.

These challenges can drain resources, tarnish your company’s reputation, and create unnecessary stress for stakeholders.

Why Succession Planning Is Crucial

Succession planning is not just about minimizing risks; it’s about ensuring the long-term success and sustainability of your business. Here are the key benefits of proactive succession planning:

Protects Business Value: A clear plan demonstrates stability and reduces the perceived risk for potential buyers, investors, and stakeholders.
Ensures Continuity: Transition plans keep operations running smoothly, even during periods of change.
Attracts and Retains Talent: Employees are more likely to stay with a company that offers clear career development opportunities and stability.
Supports Strategic Growth: Succession planning aligns leadership and organizational goals, fostering growth and adaptability.
Prepares for the Unexpected: Whether it’s a planned retirement or an unforeseen event, a succession plan ensures your business is ready for any scenario.

Steps To Start Planning

If you’ve been delaying succession planning, now is the time to act. Here are some actionable steps to begin the process:

Define Your Vision:

What does the future of your business look like without you? Consider your goals, whether it’s passing the company to a family member, selling to an investor, or appointing internal leadership. Defining your vision provides clarity and direction.

Identify Key Roles & Talent:

Evaluate the key roles in your organization and identify potential successors. This may involve internal candidates, external hires, or a combination of both. Focus on leadership qualities, technical skills, and cultural alignment.

Document Critical Processes:

Ensure that all business processes, operational workflows, and decision-making protocols are clearly documented. This makes it easier for successors to take over seamlessly.

Seek Expert Guidance:

Succession planning is a complex process that involves legal, financial, and operational considerations. Working with strategic advisors ensures that your plan is comprehensive, actionable, and aligned with your long-term goals.

The Long-Term Payoff Of Succession Planning

Planning for succession is not just about preparing for the day you step away—it’s about creating a resilient and thriving business that can succeed for years to come. A well-executed succession plan protects your legacy, preserves your company’s value, and provides peace of mind for you and your stakeholders.

At Rizolve Partners, we specialize in helping business owners navigate the complexities of succession planning. Our team of experts works alongside you to develop tailored strategies that ensure your business is ready for any transition—on your terms and timeline.

Don’t wait for “later” to plan for the future of your business. Contact Rizolve Partners today to begin your succession planning journey and secure the success of your business for generations to come.

Exit Strategy Planning and Legal Due Diligence

Posted on June 19, 2023July 13, 2023 by RizAdmin

By Stephen Cummings and Vanessa Grant

Stephen Cummings is the CEO of Rizolve Partners, a leading Exit Planning firm.

Vanessa Grant is a leading corporate lawyer with Norton Rose Fulbright Canada who is skilled in preparing for and executing business transactions for entrepreneur-led private and public companies.

PLANNING YOUR BUSINESS EXIT

There are many areas in your Business Exit where agreements and representations are made to a third-party buyer that he/she will rely on in agreeing to the transaction. Having legal advice to ensure that reasonable bargains are made such that options for recourse are limited by reasonability is important to mitigate risk.

Seeking early strategic advice, followed up by disciplined pre-due diligence planning is key to negotiating a successful transaction and ensuring that momentum in the deal is preserved.

Finally, having a skilled M&A lawyer to negotiate your side of the bargain who understands the current market for appropriate legal terms, conveys to the bidding team that you are serious about concluding a satisfactory deal.

Legal Advice on Planning Your Business Exit

The legal advisor is one of the key advisors to a business owner in planning for and executing an exit. This advisor should be part of your core transition team. Their role has the key objective of ensuring that all of the existing company legal agreements and corporate governance structures are drafted and allow for a transaction to proceed with minimum friction from any stakeholder, including the buyer.

There are two core roles that the legal advisor fulfills in this regard:

Ensuring that a company is ready from a legal perspective to navigate the transaction process. This includes ensuring that the existing (and subsequent) legal agreements and corporate governance structures (controls, policies, and guidelines) are drafted in contemplation of a future purchase and sale agreement such that documented acceptance of a transition into third party ownership has been reached, so far as possible, well in advance of a transaction; and
The legal advisor has well developed experience in drafting and negotiating a purchase and sale agreements at current market terms. Not all advisors have equal experience and a legal representative who is active in the M&A market is important.

STRATEGICALLY PLANNING A TRANSACTION

In strategically planning a transaction, a legal advisor should be included to offer advice in the review in such matters as:

Tax efficiency of the ownership or corporate structure;
Capital structure and the approval process for a transaction;
The nature and extent of the liabilities contained in the financial instruments held;
The corporate governance in any shareholder agreements, the articles and the laws of the company that will impact the ability of the entrepreneur to affect a transaction;
Understanding the nature of the outcomes of different exit options.

After making a decision to transition the ownership of the company into different hands, the legal advisor should then be engaged to review, from a tactical perspective, all of the elements of the corporate group structure, agreements governing the rights of shareholders, equity compensation plans and other financial instruments, the articles of the company, the laws and existing legal agreements to ensure that there are no blockers or issues of significance that would cause a problem for the transaction. Examples of the legal counsel review would include the following:

Buy-Sell Agreements

Are there any?
If so, do these agreements contain documented purchase options?
If so, are there any provisions related to the departure of the entrepreneur?

Participation Agreements

Are there bonuses or distributions on exit?
Are there allocation of profits, distributions or carried interest that activate on sale?

Intellectual Property

Does the company have an inventory of its registered and unregistered intellectual property? For example:
- Patents
- Trademarks
- Trade secrets
- Copyrights
- Domain names
- Data
If the company develops or has developed its own software, is the software subject to an open-source license?
Is it clear who owns the intellectual property?
- Distinguish between employer, employee, contractor or prior employer
Are protections in place to further guard the intellectual property such as:
- Assignment of intellectual property agreements
- Confidentiality agreements
- Prior restrictions
- Internal policies and procedures
- Licenses

Financial Agreements

What are the financial covenants?
Are there personal guarantees that will need to be released on closing?
What are the change of control provisions?

Contracts

For all agreements:
- Is there a change of control provision that requires the consent of the counterparty on a change of control (sale) of the company?
- Are there limitations of liability or unlimited liability?
- Are there indemnification clauses?
- Do you have insurance to cover the indemnification provisions in the agreement?
Customer and vendor agreements
- Is it clear which form of agreement takes precedence (look for terms and conditions that are incorporated by reference into purchase orders – do they conflict with the master agreement)?
- Are the performance terms of the contract clear?
- What are the termination provisions? Is the contract a long-term contract, or a short-term contract? Is the duration of the contract consistent with industry norms?
Leases
- Leases almost always have a change of control provision – consider the relationship with the landlord and whether there will be any issues obtaining consent for a change of control.
Licenses
- Review intellectual property clauses: who owns any intellectual property?

Human Resources

If there are any written employment agreements or offers of employment, do they reflect the current state of employment law?
What are the liabilities for vacation pay, potential severance pay, and benefits? Are these clearly documented?
Non-compete, non-solicit, confidentiality, and assignment of intellectual property provisions – what are they and what do they affect?
Retention – do you intend to provide retention incentives for any employees – all or key only?

Business Litigation and Risk Management

Litigation
- Is there any litigation?
- If so, is it likely to settle or be resolved prior to any sale of the company?
- If it is not likely to be resolved prior to a sale, discuss with your legal advisor how best to manage it with a prospective buyer.
Reducing likelihood of litigation
- Do you regularly perform credit and background checks?
- Are there onerous contract terms that should be flagged for prospective buyers?
Insurance
- What insurance policies are in place?
- What is the scope of the insurance? Does it cover the operations of the business?
- Do you need directors’ and officers’ insurance?
- Does the company have CGL and named insureds?
- Are professional liabilities covered such as errors and omissions?
- Is workers’ compensation and employer liability covered, either statutorily or with policies?
- Do you have cyber security insurance?
- Do you have employee dishonesty coverage?

Corporate and Regulatory Filings

Have all the annual returns been made and are they in good standing?
Have all extra-provincial registrations been made?
Are all required regulatory and tax filings up to date in each jurisdiction in which the company does business?
Does the company have all permits in all jurisdictions to carry on its business?

Minute Books

Do you have them completed?
Are they up to date?
Is the list of shareholders up to date and accurate?

DRAFTING THE TRANSACTION AGREEMENTS

The second major area where you will need skilled legal expertise to help you mitigate transaction risk is in drafting the transaction agreements. Key documents and components of the agreement of transaction terms are:

Letter of intent (“LOI”).
An LOI is a non-binding letter of intent usually drafted by a prospective buyer as an indication in writing of a buyer’s willingness to purchase the company. While the document is of a legal nature, however, it is not intended to be fully binding. The only binding obligations tend to be with respect to confidentiality and exclusivity. The LOI sets out the terms of the acquisition process and provides insight into what the final offer and its terms might look like.
Purchase and sale agreement.
A buyer may elect to purchase the shares of a company or all or some of the assets of a company. The form of transaction (share or asset sale) depends on a number of factors, including tax and business risk. Regardless of the form of acquisition, a business purchase and sale agreement is a legally binding contract that outlines the terms and conditions of buying or selling the business. It specifies the purchase price, assets, liabilities, warranties, any purchase price adjustments, and other important details to protect the interests of both the buyer and the seller. Much of the negotiation of a purchase and sale agreement is around what is the limit to how much a seller has to pay where there is a breach of the representations, warranties, and covenants made. The limit might be an amount equal to the purchase price (not as common as it once was) or a percentage of the purchase price and any holdback or escrows of the purchase price.
Documenting and negotiating representations and warranties.
Representations and warranties in a business purchase and sale agreement are statements made by the seller about the condition and status of the business being sold. These statements cover various aspects such as financial information, legal compliance, contracts, intellectual property, and other relevant details. If any representation or warranty is found to be untrue, the buyer may have legal remedies or options for recourse.

FINAL TAKEAWAYS

In summary, having a legal advisor with the appropriate M&A skills involved in the early consideration of the transaction strategy can save a lot of time and money. As part of the aligned core transition team, this advisor creates the potential for the transaction to proceed with minimum friction from any stakeholder, including the buyer. You can see from the above analysis that there are many areas to consider and having a trusted, knowledgeable legal advisor who knows you and your goals is critical to achieving a satisfactory outcome.

For more information about Exit Planning, check out our process expertise tips sheets here.

What is Transferable Value and How Do I Build It?

Posted on May 24, 2023June 6, 2025 by donna

Transferable value refers to the value that a business holds for someone else, without the original owner’s involvement. It is important to understand that transferable value is not the same as profit. Although a business may generate substantial profits, it may not necessarily have transferable value. The transferable value of a business is determined by its ability to function effectively in the absence of its owner, rather than how efficiently the owner manages it.

Peter Christman, the co-founder of the Exit Planning Institute, in his book, “The Master Plan”, identifies the three legs to the stool of a successful exit strategy:

Maximizing Transferable business value;
Ensuring that the Owner is financially prepared; and
Ensuring there is a plan for “What next?”

Each of these key elements of a successful exit strategy need to be understood as they are critical. In this blog we will focus on Transferable Value.

The acquirer of a business whether it be a family member, employees, or third parties, are really looking to take possession of a business that produces cash into the future on a sustained basis with predictable results.

To build transferable value in your business, it’s essential to assess your value drivers. By implementing and improving value drivers, you can develop a business that can be transferred to someone else without any significant disruption to its cash flow.

So what are prime examples of transferable value and issues surrounding it that an incoming owner would prize highly and pay fully for?

Leadership and Human Resources

A strong team of human resource assets that work towards a common vision and set of goals within a defined culture that establish the boundaries for strong working relationships. Within that team would be competent management that can help ensure the smooth running of your business, maximize profits, and make informed decisions that drive growth towards the Company Vision.

Supporting management should be a balanced team with multidisciplinary skills that facilitate the execution of the Plans to individually and collectively defined goals and who motivate each other. The key quality is a team that can execute a plan consistently to increasingly valuable ends.

Examples of issues found in due diligence that would raise value in the mind of the buyer:

Strong, skilled, balanced and competent management teams;
Retention agreements with key staff to ensure that they stay with the company to facilitate transition;
A succession plan for leadership positions as the Owner transitions out of the business, and no gaps in skills in the human resource matrix.

Maintenance of Good Financial Records

Maintaining good financial records is another crucial step in building transferable value in your business. This includes having a clear record of your revenue, expenses, and cash flow. By keeping accurate and up-to-date financial records, you can track your business’s financial performance, identify areas for improvement, and demonstrate to potential buyers or investors that your business is financially stable and well-managed.

Here are some reasons why maintaining good financial records is important:

Financial transparency – creates trust and confidence;
Better decision-making – to make informed decisions on cost cutting or new initiatives;
Tax compliance – to stay compliant with regulations and make appropriate deductions;
Improved cash flow management – to track cash flow and manage finances; and
Valuation – to show a clear picture of prospects to help the evaluation of future value.

Being able to deliver future projections and estimate the net cash flow that the business will generate, informs decision making and enables nimble management as economic conditions change. Evidence of the repeating cycle of success: Strategic plan; Budgeting process; Performance review; and Rolling forecasting, demonstrates that the business possesses up-to-date information on goal attainment as the central focus of its tactical decision-making process. It also highlights the business’s capacity to adapt and modify plans to embrace emerging opportunities and address potential risks on a timely basis.

During due diligence, a buyer will be assessing:

What the quality of the reported numbers are – audited financial information is presumed to be the highest quality;
The value of future plans with projections that are predictable and sustainable. This will help the buyer assess future returns so an offer can be made based on both reported and anticipated cash flows;
The current status of compliance reporting; and
The appropriateness of accounting policies with GAAP and consistency with their presentations.

Issues that could create transferability issues are: Loss making businesses; qualified audit opinions; or contingent liabilities such as the outcome of current lawsuits.

Legal Protection

A company contract is a legally binding agreement between two or more parties that outlines the terms and conditions of their business relationship. Contracts play an important role in protecting business interests, reducing risk, and increasing transferable value.

Having clear legal contracts in place that document agreements with Customers, Suppliers, Employees, Partners, Shareholders and other key stakeholders to the business is important for a third party, particularly when the buyer is purchasing shares of the company.

It is commonly the case that Companies have short-cut creating legal documentation as they grow and have avoided incurring legal fees by “copying” other company document formats. While this serves a purpose at the time (keeping costs down), it is important for a lawyer to review the existing documents to confirm that they are appropriate for the current business conditions especially in contemplation of a change of control.

Given the focus of the buyer on the future and sustainability and growth of current business, the existence of patents to protect intellectual property into the future is of heightened importance – even if the patent protection is in place but “pending”.

Finally, having no disputes outstanding and a clean record is valuable. Conversely, the existence of lawsuits is often a blocker to transferability. It is therefore highly recommended that legal disputes are settled well in advance of any transaction.

Recurring Revenue and Efficient Sales Processes & Systems

The process and systems that exist in a company to identify, prospect, engage, excite, sell to and convert prospects and customers in the Sales process is a key leverageable asset. A buyer will want to ensure these are in place to facilitate their plans to operate and grow the business into the future. The absence of good quality, repeatable systems is likely a significant issue for a buyer that can negatively impact transferability and business value.

In particular, the existence of a sales pipeline and a sales back log will be the subject of detailed due diligence, and the probability of conversion of the pipeline into future cash will determine how transferable the business is.

During due diligence, the quality of the processes and systems will be assessed.The existing pipeline, as often captured in a CRM, will be scrutinized and is often key to the value placed on a business.

Transferability will be impacted where:

Systems and processes are undocumented, impacting scaleability; and
Sales pipeline and evidence over the probability of converting a lead is poor, leading to low visibility behind sale projections.

The repeatability of sales to customers should be emphasized during due diligence both historically and in showcasing the ability to convert prospects.

Marketing and Customer Service to Support a Strong Brand

Developing a strong brand is a critical step in building transferable value in your business. A strong brand creates a lasting impression on your customers, making your business more memorable and recognizable. It can differentiate your business from competitors, increase brand recognition, build customer loyalty, support premium pricing, and provide a competitive advantage. By doing so, you can create a more attractive business for potential buyers or investors.

The transferable value is often documented in:

The development of a marketing brand book – that documents characteristics of brand identity;
Documentation outlining the company’s Unique Selling Proposition;
A history of strong and improving customer satisfaction scores using widely accepted scoring benchmarks such as Net Promotor Score; and
Marketing conversion metrics giving a clear track record of understanding the ideal customer and their needs and wants.

Operational Capacity and Ability to Fulfil the Sales Promises

Operational capacity is the business’s ability to fulfil orders in a timely manner such that the customer is satisfied that the brand promise has been fulfilled time and again.

The buyer of a business is interested in whether the Operations of the systems of fulfilment and Customer service are repeatable and set up such that the promises made by Sales are satisfied no matter what time of year and in spite of different influences on the business.

They also focused on whether such practices are scaleable and therefore sustainable. In this regard they would want to know if Standard Operating Procedures (“SoP’s”) are in evidence and are teachable to facilitate higher volumes.

Transferable value is contained in:

Documented SoP’s;
Documented training in Systems and Procedures;
Products that are standardized as opposed to being customized; and
Human resources that are onboarded and trained in procedures with defined job descriptions so that they can become a productive member of the team in the minimum time possible.

In summary, this presents several key value drivers and indications for you on what represents transferable value. This is by no means an exhaustive list, and you should seek professional help in identifying transferable value in your business. Your company’s transferable value needs to be showcased and emphasized during due diligence with prospective acquirers.

As a final thought, the “three legs to a stool” is a powerful symbol in this context when you consider what happens to the three-legged stool that is short one leg. Note that 75-80% of businesses fail to sell when they are brought to market *. Beware ignoring the components of a successful exit strategy and in particular the drivers of transferable value.

By focusing on the key value drivers, you can build transferable value in your business and make it more attractive to potential buyers or investors. It is important to remember that building transferable value takes time and effort, but the long-term benefits can be significant.

* Tom West, Business Reference Guide

Rizolve Partners understands what needs to be done to achieve sustainable, high-quality growth.
To learn more, check out our process expertise tips sheets here.

Four Steps to Finding Your Sell-By Date

Posted on November 20, 2022December 20, 2022 by donna

Most business owners think selling their business is a sprint, but the reality is it takes a long time to sell a company.

The sound of the gun sends blood flowing as you leap forward out of the blocks. Within five seconds you’re at top speed and within a dozen your eye is searching for the next hand. Then you feel the baton become weightless in your grasp and your brain tells you the pain is over. You start an easy jog and you smile, knowing that you did your best and that now the heavy lifting is on someone else’s shoulders.

That’s probably how most people think of starting and selling a business: as something akin to a 4 x 100-meter relay race. You start from scratch, build something valuable, measuring time in months instead of years, and sprint into the waiting arms of Google (or Apple or Facebook) as they obligingly acquire your business for millions. They hand over the check and you ride off into the sunset. After all, that’s how it worked for the guys who started Nest and WhatsApp – right?

But unfortunately, the process of selling your business looks more like an exhausting 100-mile ultra-marathon than a 100-meter sprint. It takes years and a lot of planning to make a clean break from your company – which means it pays to start planning sooner rather than later.

Here’s how to backdate your exit:

Step 1: Pick your eject date

The first step is to figure out when you want to be completely out of your business. This is the day you walk out of the building and never come back. Maybe you have a dream to sail around the world with your kids while they’re young. Perhaps you want to start an orphanage in Bolivia or a vineyard in Tuscany.

Whatever your goal, the first step is writing down when you want out and jotting some notes as to why that date is important to you, what you will do after you sell, with whom, and why.

Step 2: Estimate the length of your earn-out

When you sell your business, chances are good that you will get paid in two or more stages. You’ll get the first check when the deal closes and the second at some point in the future — if you hit certain goals set by the buyer. The length of your so-called earn out will depend on the kind of business you’re in.

The average earn out these days is three years. If you’re in a professional services business, your earn-out could be as long as five years. If you’re in a manufacturing or technology business, you might get away with a one-year transition period. (Estimate: + 1-5 years)

Step 3: Calculate the length of the sale process

The next step is to figure out how long it will take you to negotiate the sale of your company. This process involves hiring an intermediary (a mergers and acquisitions professional, investment banker or business broker), putting together a marketing package for your business, shopping it to potential acquirers, hosting management meetings, negotiating letters of intent, and then going through a 60 to 90-day due diligence period. From the day you hire an intermediary to the day the wire transfer hits your account the entire process usually takes six (at best) to 12 months. To be safe, budget one year. (Estimate: + 1 year)

Step 4: Create your strategy-stable operating window

Next you need to budget some time to operate your business without making any major strategic changes. An acquirer is going to want to see how your business has been performing under its current strategy so they can accurately predict how it will perform under their ownership. Ideally, you can give them three years of operating results during which you didn’t make any major changes to your business model.
If you have been running your business over the last three years without making any strategic shifts, you won’t need to budget any time here. On the other hand, if you plan on making some major strategic changes to prepare your business for sale, add three years from the time you make the changes. (Estimate: + 3 years)

Figuring out when to sell

The final step to finding your sell-by date is to figure out when you need to start the process. Let’s say you want to be in Tuscany by age 50. You budget for a three-year earn out, which means you need to close the deal by age 47. Subtract one year from that date to account for the length of time it takes to negotiate a deal, so now you need to hire your intermediary by age 46. Then let’s say you’re still tweaking your business model – experimenting with different target markets, channels and models. In this case, you need to lock in on one strategy by age 43 so that an acquirer can look at three years of operating results. (Estimate: 4-7 years)

It certainly would be nice to make a clean, crisp break from your business after an all-out sprint, but for the vast majority of businesses, the process of selling a company is a squishy, multi-year slog. So the sooner you start, the better.

Rizolve Partners is a trusted strategic advisory firm dedicated to helping business owners achieve peak value. If you’d like to learn more, let’s have a conversation. You can reach us in any number of ways here.