Pivotal moments involve your family, too.

Business Transition

Business owners often have their heads down in company affairs during acquisitions. But they should prepare for the changes brought on by the transaction.

The years of building your business have led to this: an acquisition offer. You’ve spent countless hours operating your company, maneuvering it through economic cycles, and reacting to sudden changes. And now’s the right time to accept the offer.

In the coming months, you’ll likely be working extensively with your business team on the transaction’s many details. But how much time will you spend preparing yourself—and the people you care about—for the transition?

These transitions are pivotal moments that create major changes in your life due to wealth creation. Informing your family and preparing yourself and the people close to you can increase your chances of a smooth, fulfilling next stage. That’s when you begin the transition to operating a family enterprise whose goal is to sustain wealth from generation to generation.

Ramp up the family enterprise.

“The tenets of running a family enterprise are similar to those of operating a business,” says David Herritt, head of Truist Wealth’s Center for Family Legacy. These tenets include having a mission, an organizational design, a strategic plan, and a succession plan. Family priorities for life after the transition tend to fall into six categories:

  • Family cohesiveness
  • Governance
  • Strategic planning
  • Philanthropy
  • Mentoring
  • Trusts and estate planning

Business owners can start by thinking through how, when, and what to communicate with family members, Herritt says. Family members want to understand their roles in this new enterprise.

“The key question is, what does life look like after the transition?” he says.

Prepare the human capital.

One of the first steps in a successful transition is to strengthen family bonds. In its work with families, the Center for Family Legacy notes the importance of preserving and frequently communicating the family’s shared history, values, and mission. Encouraging teamwork and fostering open dialogue also can help resolve any current issues within the family—and head off future ones. Another way to build a more cohesive family is to put family members’ well-being ahead of the family’s money.

The second step: Emphasize wealth education, Herritt says. This covers not only investing and basic financial education, so that family members can gain confidence in making decisions about money, but also how wealth issues affect family relationships. Teaching life skills such as parenting and providing guidance on career choices can also help family members become responsible beneficiaries of wealth.

Finally, make your intentions for the wealth from this pivotal moment clear to your family. In other words, talk to the next generation about the estate plan. Herritt says this increases trust, communicates expectations, and helps these family members prepare to become heirs.

Get an early start.

Planning for these conversations should start as early as possible so that you aren’t caught off-guard by a pivotal moment, Herritt says. If that happens, you might feel rushed through a transaction that on average takes about 1.5 years to complete.

“With that short of a time span to dot all the i’s and cross all the t’s on the transaction itself, owners might not be focused on personal aspects of the transaction,” Herritt says. “To do the right estate planning, to think about how this impacts your family and how it impacts you and your psyche, you need to start early.”

Lee McCrary, head of Truist Wealth’s Strategic Client Group, says owners often are so focused on the many needs of their business that their family and personal needs take a back seat. According to research, “the number one regret of business owners post-transition was that they wish they’d spent more time on their personal wealth preparation,” he said in Episode 9 of the Truist Wealth podcast “I’ve Been Meaning To Do That.”

Involve your wealth team.

Your Truist Wealth advisory team can help by being integrated into your business team. These advisors can represent your values and intentions in planning for pivotal moments as well as executing them.

A comprehensive plan for the life you want after the transaction includes many moving parts. Trust, estate, and legacy planning is just the beginning. There are also decisions to make about investments and future cash flow, risk management, philanthropy, and family governance and education.

And the earlier you begin these discussions with your advisory team, the better the chances you’ll be ready to make the transition to the family enterprise.

Get help preparing for conversations about important business developments that can protect your company, personal wealth, family, and legacy.

Read our Truist Purple PaperSM “Navigating pivotal moments.”