Are You Looking to Sell Your Business?

Smart Exits: Strategic Blueprint for Selling Your Family Business

How to Exit a Family Business With Purpose, Profit, and Peace of Mind

We’ll explore:

1. Preparing Yourself and Your Family for the change in your schedule, liquidity and stewardship responsibilities that come after the sale.
   
2. Preparing the Business for a Sale to maximize the value and create a “must-have” company.
   
3. Preparing for the Financial Impact including wealth management, tax strategies, and estate planning.

When you address these areas thoughtfully and well in advance, you can enhance both your satisfaction with the transaction and your financial results. Without that preparation, you risk lowering the value of the deal, increasing your tax burden, and walking away with less than you expected.

When you address these areas thoughtfully and well in advance, you can enhance both your satisfaction with the transaction and your financial results. Without that preparation, you risk lowering the value of the deal, increasing your tax burden, and walking away with less than you expected.

To help guide you, Whittier Trust has created this Smart Exits: Strategic Blueprint for Selling your Family Business, a tool designed to highlight key considerations so that, if you decide to sell your family business, you can move forward with confidence and achieve the outcome you want. As you read through these thought-starters, we encourage you to make notes and talk with your family and trusted advisors. Then give us a call. We’d be pleased to help you think through your options and arrive at the best possible plan.

First Things First: Does It Make Sense to Sell?

There are some important things to consider before you commit to kicking off a sale process.

Clarify Your Reason

• Why are you thinking about selling?
• Is this the right time for you and the right time in the market?

Test the Economics

• Will the proceeds, after taxes, meet your goals and lifestyle expectations?
• Have you completed tax and financial planning to confirm the numbers?

Prepare Yourself Mentally

• What will you do with your time post-sale?
• Recognize that the process will be demanding, distracting, and time-consuming.
• Understand there’s no guarantee of success.
• Accept that buyers pay for what you’ve built, not for what “could be”—their vision of the future is based on your track record.
• Define your “number”—the minimum you are willing to accept.

If the Answer is “Yes”

After considering the above, if the answer is “yes!” it may be time to move forward.

• Assemble Your Team — you cannot orchestrate a successful outcome on your own. It will take a team of business improvement, legal, tax, investment banking, and wealth management advisors.
• Develop Your Plan — with clear steps and milestones.
• Execute with Focus — while understanding that the process can be disruptive to everyone involved.

Part 1: Preparing Yourself and Your Family

Family Alignment

• Build consensus within the family or ownership group on why you are selling and what the future will look like.
• Determine what information you will share and when.
• Prepare the next generation for stewardship so they remain engaged and productive.

Communications Plan

• Decide what information you are going to share with your Family, at what age and in what manner. Without open communications family members will try to “connect the dots” and those dots would be based on their “story” and view of the situation. It might not have anything to do with the facts.
• Family Meetings can be a good forum to share information. A good family meeting is not just work; it should be fun for all ages so that family members look forward to future family meetings.

Guiding Tools

• Mission, Vision & Values — your “North Star” and guardrails. Alignment around the family’s Mission, Vision and Values will make decisions easier because you will know who you are and what you stand for.

Expand Your Definition of Wealth

• Family wealth includes more than financial capital.
• Build all four capital accounts: Financial, Human, Intellectual, and Social.

Bottom line: Selling your business is a transformation—not just a transaction. The right preparation for yourself and your family will not only maximize your outcome but prepare yourself and your family for family unity, enjoyment, and stewardship for the next chapter of your life and legacy.

Part 2: Preparing the Business for a Sale

In the first part, we focused on preparing yourself and your family for the sale of a business. Now, we turn to the business itself—and the critical steps needed to maximize its value before going to market.

Selling your company successfully requires far more than hiring an investment banker. This phase is about making your business so strong, attractive, and competitive that it becomes the obvious choice for a buyer. And it takes time—often two to four years—to do it right.

Here’s why:

• It may take a year just to identify opportunities for improvement and implement changes.
• It may take another one to two years for those changes to positively impact your P&L.
• You’ll then need a year of consistent results to prove the improvements are sustainable.

If you’ve had the same leadership team for more than five years, consider bringing in an outside executive with deep operating experience to objectively assess your business and uncover hidden value.

Here are the core focus areas:

Business Strategy & Annual Operating Plan

• • Keep a written business plan and show you consistently meet your goals.

• • Demonstrate a balanced, resilient product mix and a diversified, loyal customer base.

• • Prove that you have a clear marketing strategy that drives demand and reflects your understanding of the competitive landscape.

• • Build credibility by showing a track record of setting objectives—and achieving them.

People & Culture

• • Strengthen your management team—buyers purchase leadership as much as EBITDA.

• • Demonstrate that your senior team, without you, has vision, leadership skills, emotional intelligence, strong communication, and proven problem-solving abilities.

• • Show that your culture supports growth, accountability and collaboration that drives the business forward and delivers results.

Operational Discipline

• • Track and understand your key performance indicators (KPIs). This shows that you really know what drives your business.

• • Make your KPI’s visible. If people know you are tracking it, it will improve.

• • Maintain a robust quality program to control costs and improve customer satisfaction.

• • Provide accurate, timely, and clear operational and financial reports—mastery of data builds buyer confidence.

• • There is strength in the command of the data.

Financial Strength

• • Gross margin is #1! Prioritize it. A strong gross margin shows that you can make money while producing and delivering your core products or services. Most operating expenses are manageable. A strong gross margin is the key.

• • Deliver EBITDA growth above industry standards to show that you are a very attractive acquisition.

• • Maintain strong financial controls, clean books, and disciplined reporting. This shows that your Company is well run with nothing to “fix” and therefore, very desirable.

• • Keep a healthy balance sheet.

• • Document your “adjusted EBITDA” to clearly show normalized performance.

Governance and Decision Making

• • If you don’t have an Advisory Board, consider adding one. They can add value during the process and improve your management team’s performance. An advisory board also shows the buyer that the team is used to taking outside advice and will be open to change.

• • An advisory board can also give you a ‘higher authority’ to improve your negotiating position during the sale process.

• • Demonstrate that your management team makes good decisions, even if you are not involved.

• • When making tough business decisions, focus on the facts and numbers. Numbers have no emotions and ask “Why?” or “So What?” at least 5 times to get to the real issues underneath the surface.

The Goal: Build A “Must-Have” Company
You want to build a company that is so competitive and well-positioned that if someone wants to enter your market, the only real option is to buy you.

Bottom line:
Selling your business isn’t just a transaction—it’s a transformation. With the right preparation, the right team, and a disciplined approach, you can maximize value, attract the best buyers, and create a smooth transition to your next chapter and legacy.

Part 3: Preparing for the Financial Impact

A focus on wealth management, tax strategies, and estate planning

Selling your business for a premium can be one of the most rewarding moments of your life. But without thoughtful planning, that victory can be cut in half—literally—by taxes. Too often, owners build a “must-have” company, find the right buyer, and prepare themselves and their family for the sale, only to see a large portion of the proceeds go to Uncle Sam. The key to avoiding this outcome lies in sophisticated estate, tax, and investment strategies implemented before the sale.

Your estate planning attorney, wealth manager, legal counsel, and tax advisor should work together well in advance of a sale to ensure your goals are protected and your wealth is preserved.

Review Your Family Goals and Objectives

• Define your personal and family priorities clearly.
• Communicate these goals to ensure alignment among all stakeholders—both inside and outside the family

Estate Tax Planning Strategies

There are lots of estate planning strategies. Here are some of the more popular ones that you might want to consider with your Team.

• Intentionally Defective Grantor Trust (IDGT) and Nevada Situs trusts are estate planning tools for business owners, especially before a sale, because it can transfer future appreciation out of your taxable estate while still letting you control and manage assets indirectly.
• Family Limited Partnership (FLP) / LLC is a common estate and business planning structure for high-net-worth families, especially those with closely held businesses, investment portfolios, or real estate. Its appeal comes from a blend of control, tax efficiency, and asset protection.
• Discounted Sale or Gift of Fractional Interests is an estate and gift tax strategy that takes advantage of the fact that a partial, non-controlling ownership interest in an asset (like a business, real estate, or investment entity) is worth less than its proportional share of the whole. The key advantage: You can transfer more economic value to heirs while reporting a lower taxable value for gift/estate tax purposes.
• Installment Sale with Promissory Note is a planning technique where you sell an asset—often to a family member, trust, or family entity—and receive payment over time rather than all at once. The main advantage: You can shift future appreciation out of your taxable estate while receiving a steady stream of income and potentially reduce gift and estate taxes.
• Spousal Lifetime Access Trust (SLAT) enables you move assets out of your taxable estate while still keeping indirect access to them through your spouse. It’s especially useful for high-net-worth couples who want to take advantage of today’s historically high gift and estate tax exemptions before they potentially decrease.
• Grantor Retained Annuity Trust (GRAT) is a vehicle that can transfer significant asset growth to heirs with little or no gift tax, making it especially attractive when you expect a big jump in value—like before a business sale.

Charitable Giving Structures

• Charitable Remainder Trust (CRT) is an irrevocable trust that lets you receive income from the trust for a set number of years (or for life), get an immediate charitable tax deduction, and leave the remaining assets to charity when the trust ends. It’s a way to convert highly appreciated assets into income without paying capital gains tax right away, while also supporting a charitable cause.
• Donor-Advised Fund (DAF) is a charitable giving vehicle that lets you make a contribution, receive an immediate tax deduction, and then recommend grants to charities over time. It’s like having a simplified, low-cost private foundation without the heavy administrative burden.
• A private foundation is a charitable entity you create and control, funded with your assets, that makes grants to charitable organizations or conducts its own charitable programs. While it’s more complex than a donor-advised fund (DAF), it offers maximum control, flexibility, and legacy-building potential for families who want a long-term charitable presence.

Income Tax Planning Considerations

• Leverage potential benefits of Qualified Small Business Stock (QSBS)
• Optimize the ownership structure of your business
• Evaluate the location of your business—being headquartered outside high-tax states like California can offer significant advantages.

Valuation Matters

• Timing — The point in time when your business is valued can greatly impact tax outcomes.
• Discounts — Understand opportunities for valuation discounts in certain transfers.

Bottom Line: Selling your business is not just a transaction—it’s a transformation. The right pre-sale planning for estate, tax, and wealth management ensures that you preserve more of what you’ve built, secure your family’s future, and position your legacy for the next chapter. Having the right advisors and strategists in place can mean the difference between a sale transforming your life in all the ways you’ve dreamed of and experiencing disappointment that may continue well into the future. To consult with Whittier Trust’s team, get in touch here. 

BONUS: If you’re hungry for more in-depth information on this topic, here’s a helpful reading list of other resources.

Family Business:

• Hats Off 2 You, Balancing Roles and Creating Success in Family Business, by Lee Hausner and Ernest Doud.
• Your Business, Your Family, Your Legacy, Building a Multigenerational Family Business That Lasts, by Geroge Isaac.

Family Legacy:

• The Legacy Family, The Definitive Guide to Creating a Successful Multigenerational Family, by Lee Hausner and Douglas Freeman.

Wealth:

• Wealth, Grow It and Protect It, by Stuart Lucas.
• Family Wealth, Keeping It in the Family, How Family Members and Their Advisors Preserve Human, Intellectual and Financial Assets for Generations, by James Hughes.

Philanthropy:

• Give $mart, Philanthropy that Gets Results, by Thomas Tierney and Joel Fleishman

Financial Acumen:

• Financial Intelligence, A Manager’s Guide to Knowing What Numbers Rally Mean, by Karen Berman and Joe Knight.

Business in General:

• BE 2.0, Turning Your Business into an Enduring Great Company, by Jim Collins and Bill Lazier
• Good to Great, Why Some Companies Make the Leap and Others Don’t, by Jim Collins and Bill Lazier
• Traction, Get a Grip on Your Business, by Gino Wickman.

Life:

• Play to Win, Choosing Growth Over Fear in Work and Life, by Larry Wilson and Hersch Wilson.
• Start, Stay or Leave: The Art of Decision Making, by Trey Gowdy
• Crucial Conversations, Tools For Talking When Stakes Are High, by Joseph Grenny, Kerry Patterson, Ron McMillan, Al Switzler and Emily Gregory

   

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Featured in Family Business Magazine.

Written by Peter Zarifes, Managing Director – Director of Wealth Management at Whittier Trust and Ken Ude, former Director of the USC Marshall Family Business Program. Peter is based out of the Pasadena Office where he provides a full range of wealth management, family office, philanthropic, real estate, and trust services.

To learn more about how a multi-family office can help steward your family’s wealth, start a conversation with a Whittier Trust advisor today by visiting our contact page.