By: Ryan Kunkel, President at Third Road Management
Hundreds of thousands of baby boomer–owned businesses are transitioning each year, contributing to a broader wave of millions of ownership changes over the next decade.
As this wave accelerates, many owners are focused on finding the right successor or buyer. Far fewer are asking whether the business itself is ready for the transition.
Simply put, a business is not truly transition-ready if core financial and operational functions still depend on the owner to keep moving.
Buyers don’t pay a premium for dependency. They pay for systems, processes and teams that can operate effectively without the owner at the center of every decision.
As the silver tsunami gains momentum, many financial departments that are set up to handle the day-to-day work of the business – invoicing, expense tracking, payroll, etc., aren’t set up to facilitate a transaction or change of ownership.
So, how should business owners looking to transition their companies prepare their finance department and broader organization?
Here are five tips:
1. Identifying the gaps: Ensure the right skill set is in place
You may find gaps in knowledge from strategy to auditing to day-to-day bookkeeping. The goal isn’t simply to have a finance function in place; it’s to have one that provides accurate information, supports decision-making and gives stakeholders confidence in the business.
Making sure your team is robust will ensure that your financials are well-positioned to drive max value in a sale.
2. Filling the gaps: Assess where additional support is needed
If your succession strategy is unclear, having a CFO who can model out various scenarios is critical. Experienced financial leadership can help evaluate different transition paths, model potential outcomes and prepare the business for critical ownership decisions before they become time-sensitive. Decisions about ownership, i.e., whether passing the business to a family member or selling to private equity, can significantly impact valuation and deal structure.
3. Strengthen readiness: Document process and cross-train critical roles
Many organizations have hidden vulnerabilities in core processes like month-end close or reporting that rely too heavily on one individual.
Process mapping and clear documentation – whether developed internally or with outside support – ensure continuity and reduce risk. When critical information lives in one person’s head, it can create risk, slow due diligence and raise concerns about business continuity.
A simple test: if a key team member were suddenly unavailable, could the function still operate effectively?
Addressing these gaps early strengthens readiness and allows for smoother transition.
4. Find solutions: Build flexibility into the finance team
Succession planning often creates temporary demands that existing teams aren’t equipped to absorb. Oftentimes, owners worry about laying people off. Stacking your financial department with flexible, fractional support can alleviate this problem – allowing business owners to bring in the right kind of talent for the right amount of time.
This approach provides access to specialized expertise without permanently increasing headcount or restructuring the organization. It also creates a dynamic partnership that can evolve as needs change throughout the transaction process and beyond.
5. Prepare for – and actively manage – transaction costs
Many owners underestimate how expensive, distracting and stressful a transaction can be. Initiating a sale is an expensive endeavor.
From legal and consulting fees to opportunity costs as leadership gets pulled away from day-to-day operations, the process can be resource-intensive. Know this. But also know that having a strong financial function will allow you to control as much of the cost as possible.
Fiscal stewardship throughout the sales process is critical. In many cases, upfront investment in financial infrastructure and expertise can lead to long-term cost efficiencies and a stronger outcome at exit. Perhaps more importantly, it allows leadership to stay focused on running the business while preparing it for sale.
In all, successful succession planning requires a skilled and adaptable financial team. The five key tips – ensuring expertise, determining support needs, building operational resilience through documentation and cross-training, staying nimble and controlling costs – are all vital for preparedness. For many organizations, experienced financial leadership, i.e., such as a fractional CFO, can provide the strategic and operational support needed to navigate this transition.
Ultimately, succession planning is not just a transaction exercise; it’s an operational one. The businesses that navigate ownership transitions most successfully are the ones that have invested in the people, processes and financial infrastructure needed to operate beyond any single owner. Without that foundation, succession planning is often just optimism.
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