I was speaking recently with an owner in his early sixties — solid business, good margins, a team that mostly ran things without him. He'd been thinking about stepping back for a few years but hadn't done anything formal about it. "I'll get to it," he said. "The business is in good shape."
The business was in good shape. That part was true. What he hadn't worked through was the personal side: what did he actually need the business to generate — at the moment he left it — to fund the next twenty-five years of his life? Did he know what that number was? Had anyone ever helped him calculate it?
He hadn't. Nobody had.
The numbers worth sitting with
CT Acquisitions recently published a guide for owners aged 60 and older that pulls together some data worth knowing. Roughly 51% of privately held U.S. business owners are 55 or older. The average sell-side timeline runs 18 to 24 months from decision to close.
The Exit Planning Institute found that 75% of surveyed owners plan to exit within 10 years. Yet 79% have no written transition plan, and 49% have done no formal exit planning at all.
For most of these owners, the business represents the majority of their net worth. There is no pension. There is no large brokerage account sitting separately. The business is the retirement plan — and it only pays out once, at the moment of transition, on whatever terms the market and the owner's preparation allow.
The personal plan has to come first
This is the piece that most business planning skips entirely. The CPA focuses on the business. The financial advisor focuses on the investments. Nobody sits down and asks the question that connects both sides: what does this business need to be worth — at the moment you leave it — for you to be financially independent for the rest of your life?
Until you know that number, the business planning is guesswork. You don't know if you're close or far. You don't know if what you're building is enough. You're optimizing without a target.
When we work with owners, we start with the personal side first. What does the owner want their life to look like after the business? When do they want to stop? What income do they need? What does "enough" actually mean? Then we work backward to the business — what value does it need to reach, and what has to change operationally to get there?
The business is the vehicle. The personal plan is the destination. You can't set a route until you know where you're going.
The 18-to-24-month window
If the average sale takes 18 to 24 months from decision to close — and that's for a business that's already prepared — then the owner who decides at 64 that they want to retire at 65 has a problem. The timeline doesn't fit.
The owners who exit on their terms start this conversation three to five years before they intend to leave. Not because the transaction takes that long, but because building the kind of business that commands the right price takes that long.
If you haven't had this conversation yet, now is a reasonable time to start. Give me a call — we'll work through the personal side first, and then figure out what the business needs to do to get you there.