Most owners I work with are counting on the sale of their practice to fund retirement. When we sit down and look at the actual numbers - the realistic goodwill value, the likely deal structure, the tax treatment of the proceeds - the picture is often sobering.
Here is why. A CPA firm, a law practice, a consulting business - most of the value in those businesses is the owner. The relationships are personal. The expertise is yours. When a buyer evaluates your practice, they see client retention risk. They see earn-outs. They see uncertainty.
That does not mean your business has no value. It means the number may be smaller than you expect, paid out over time in ways that leave you exposed after you've already handed over the keys.
There is a better approach.
A solo cash balance plan, combined with a 401(k) and profit sharing arrangement, allows a solo practice owner in their 50s or 60s to deduct $250,000 to $400,000 or more annually into protected, tax-deferred retirement accounts. For a 62-year-old professional earning $650,000, that is potentially $300,000+ deductible every single year - for five years running.
That is $1.5 million moved into retirement accounts while cutting the tax bill dramatically during each of those years. No buyer required. No earn-out. No client retention risk.
I'm not suggesting you stop pursuing a strong sale price. I'm saying don't bet the retirement on it.
Owners who have already built significant retirement assets outside the business negotiate from a completely different position. They can accept a smaller deal. They can phase down on their own terms. They can walk away from buyers who try to renegotiate after the handshake. That shift in leverage changes everything.
If you're within 5–10 years of transitioning your practice, I'd like to offer a complimentary valuation estimate, a planning-level look at what your practice is worth today, and an assessment of whether that number is actually enough to fund the retirement you want.
No sales pitch. Just clarity.
Reply to this email or give me a call.