How business owners' exit plans create big openings for advisors

The owners of privately held businesses need advice about their concentration risk, looming exit deals and family dynamics that tie their wealth to their companies, according to a new study.

At least 88% are planning to sell at least a portion of their stakes in the next decade, according to a survey released last month by Raymond James from a sample of 540 business owners who are either self-employed or have had ownership stakes at least five years in privately held companies with between six and 1,000 employees. That criteria extends beyond the standard definition of "small" businesses that applies to firms with no more than 500 workers.

Nevertheless, the findings about the owners' intentions to sell their companies and the extent that their wealth stems from their businesses speak to the opportunity for financial advisors to help guide them through those challenges, said Brad Hindman, founder of Johnstown, Pennsylvania-based advisory practice Apricity Advisors and managing director with & Partners, and Nhaman Pelphrey, head of wealth planning with Los Angeles-based registered investment advisory firm IFC Advisors. 

At 85%, the portion of business owners who said that they have a succession plan in place was "surprisingly high" to Hindman. And one reason succession can be difficult is that many entrepreneurs intend to sell to family members.

"In my experience, many business owners say they have a transition plan, but it's often incomplete or untested," Hindman said in an email. "Even when a plan exists, a major hurdle is the buyer's ability to secure financing. When financing falls through, owners are frequently forced into seller-financed deals, effectively acting as the bank in their own succession plan. This is rarely ideal for the retiring owner and can lead to difficult conversations and strained relationships down the line."

For its business owner clients, IFC uses what the company describes as a "purpose architecture" that involves working with the customer's tax advisors, attorneys and other professionals in a process incorporating "all aspects of an owner's life, not just the balance sheet," Pelphrey said in an email.

"What we see repeatedly is that many owners believe they have a transition plan, but it often focuses narrowly on the moment of sale rather than on the journey that follows the realization of concentrated wealth," she said. "While many intend to transition within the next five to 10 years, the depth and readiness of those plans vary significantly. The biggest challenges are rarely technical. They are more often emotional and relational. Owners can underestimate how closely their identity, family dynamics and sense of purpose are tied to the business. Addressing these factors, alongside realistic market expectations and liquidity scenarios, is what separates a transactional plan from a true life-stage strategy."

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The advice needs of privately held business owners

Regardless, many of those business owners are anticipating a transaction. At least 56% said they will sell part or all of their position in the company in the next five years.

Other key results from the April 2025 survey included:

• About 90% derive at least a quarter of their wealth from the business, while 44% said the company amounts to half of their wealth.
  

• One day, 44% of owners whose businesses are worth more than $15 million seek to hand over the reins of their business to a family member. Among the whole group, the portion expecting to sell to a relative was 35%. Another 23% have another internal stakeholder in mind.
  

• Across those intending to sell, just 20% said they will retire after the transaction. One-third plan to keep working at the business, and 30% indicated they'll invest in a different company.
  

• The vast majority of the business owners, 85%, reported that they will need to secure more capital at some point to deploy toward further growth, with 52% open to financing from private equity investors, 50% who would consider a traditional bank loan, 43% who might use their own money, 43% contemplating a securities-based line of credit and 40% thinking about personal loans.
   

"To choose the best source, owners must weigh the tradeoffs for their business and desired outcome, including whether they're willing to share control with outside investors or wish to transition the business to a family member or key employees," the report said.
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Emotions and wealth

While the sales bring capital, they also mark "a profound personal transition," especially among retiring entrepreneurs who frequently "struggle with a loss of identity," Hindman said. In addition, their concentration of wealth in the business means that they often "play it too safe, choosing investments that may not grow enough to support them over the course of retirement," he said. 

"My advice to advisors looking to work with more small business owners is to be selective and patient," Hindman said. "We focus on owners who are three to five years from a liquidity event, and most of our business-owner clients come through CPA referrals. Building trust and a strong reputation in this space takes time, but it's essential for long-term success."

The wealth and other issues linked to the business explain why advisors can provide a lot of value to entrepreneurs, Pelphrey said. 

"A business owner's identity is often inseparable from the company they created," she said. "That emotional attachment can become the single biggest blocker to diversification, even when the numbers suggest it's prudent. Letting go of concentration isn't just a financial decision, it's a personal one that touches purpose, legacy and control. This is where the role of the advisor becomes essential. The advisor's job is not to dictate a single answer, but to help surface all objectives and all viable options — whether that's one path or several — and to act as a steward through that decision-making process. The real value lies in educating clients on the full range of possibilities and implications, helping them understand tradeoffs and ensuring decisions are made with clarity rather than momentum or emotion."