Business is booming in Arizona. For the second year in a row, it’s near the top spot for the most-moved-to city in the U.S., according to a report from Penske Truck Rentals. The warm weather is welcoming, and it’s accompanied by great homes and a flourishing economy.  

With this tremendous growth and an economy flush with cash, more business owners are either selling their company to an outside organization or transferring ownership to family. According to PricewaterhouseCoopers, Arizona has seen more than 323 mergers and acquisitions last year alone, resulting in $22 billion worth of deal activities.  

If the past few years are any indication, we expect this trend to continue and for owners to rely on their financial partners for guidance through the process. As owners consider how and when to sell their business, it’s important that they explore all options available to them and plan accordingly. To that end, we have created key considerations for owners seeking to get a business ready to sell or transition to new ownership. 


In years past, assets were the driver of a company’s valuation. Today, however, it’s all about cash flow – and specifically, recurring cash flow. Closely examine what’s coming in and going out on a regular basis, and work with a third party who can help use this data to determine a valuation. Your banker is a good place to start, and he or she may bring in another partner such as a private equity firm who can help land on a realistic, fair valuation of your business. 

In addition to putting a dollar figure on the business, identify the valuable key people. A key person is anyone who keeps the business running, including critical external partners. It is also important to identify all potential beneficiaries who would be entitled to proceeds if the business were to be sold.  

Personal assets and relevant documentation, like deeds, should also be accounted for – and be sure to include investments such as those in retirement accounts, as they can have an impact on liquidity and taxes.

Succession plan 

While it’s critical to identify who the successor(s) will be, it’s equally as important to determine who won’t be involved in the company’s future state and what that means. Typically, these individuals receive a buy-out payment. Other considerations in this area include deciding which assets to liquidate and transferring value as either ownership shares or monetary settlements. Open communication and intentional dialogue are crucial components of a successful transfer strategy. 

It’s also important for the new leadership team to understand and be comfortable with specific roles. Typically, everyone should agree on a new CEO, and a structure I’ve seen work best is for each leader to have their own lane. For example, one is in charge of marketing, another in charge of accounting, etc. They all stay in communication with each other, but the clearly defined roles help keep emotions out of the transition, particularly when it’s within a family, and allow the business to run more smoothly.

Estate planning is also a key component of the succession plan. Proper estate planning provides clear direction on how to control property and assets during the owner’s life and extends that control if the owner is disabled. Consider all aspects of personal and business wealth in the estate plan, including retirement income, estate taxes, asset distribution, business funding and any potential fees or taxes related to ownership transfers.  

Timeline and exit specifics

As you build out your plan, determine when and how you’d like to exit. Are you looking to do so 10 years down the road, or sooner? And how are you going to monetize the exit? Will you be paid even after your days as a leader end, are you receiving more dividends and distributions, or are you taking a lump sum of cash? Alternately, are you considering an owner carry-back note to be paid over a five-year period? And, at any point, will there need to be any outside financing involved to successfully execute the transition while maintaining necessary liquidity for the company? Finally, do you have people in place to execute the plan when it’s time? 

Again, this is where third-party experts can help. Your banker can support initial decisions and connect you with a private wealth advisor. He or she can also bring in additional advisors such as a tax attorney or business succession specialist to help you navigate these decisions. 

Refresh and update the plan 

It will be necessary to make sure that, even if the plan is years away from being executed, assets are titled properly. When assets are added or sold, or when beneficiaries or management change, remember to retitle the assets and consult with a wealth advisor. This can be the difference between leaving a gift and establishing a legacy. Wealth advisors can assist in explaining the estate plan structure and in facilitating the conversation about the strategy—particularly when it comes to why the plan is built the way it is.

After the exit

Planning for and executing a business sale is a very time-consuming, complicated and emotionally draining process. When it’s completed, owners should take some time to celebrate the next life phase. Create a new plan, including how to manage cash flow, investments and how to maintain the new plan going forward

As a newly retired business owner, you will have to become comfortable with your new reality, and an investment or finance professional can ease that transition by helping you ensure you are prepared for the future. It’s critical to have active, honest conversations about expectations and priorities. These may extend beyond a seller and a financial advisor, and may include family members as well. 

Timing is everything for business owners looking to successfully transition their operations. A phased and thoughtful exit plan when preparing for businesses succession provides long-lasting protections and peace of mind, which is the reward for years of hard work growing a business.


Robert Faver is commercial market president of UMB Bank’s Arizona region. He can be reached at