As business owners prepare for a transition, the focus tends to be on the business itself. Equally important is their long-term personal wealth strategy.
Baby boomers own nearly half of all private businesses1, and by 2030, every baby boomer will be over age 65. Approaching retirement, those business owners now face a pivotal question: What happens to my business — and my wealth — when I step away?
The answer isn’t simple. But one thing is evident: the most successful transitions often happen when business owners early and intentionally integrate personal and business planning, make a transition plan, and prepare for a shift in personal finances.
“When you integrate the planning of both your personal and business legacy, you create a seamless story that encapsulates the meaning of what it means to be a business owner, setting examples for successors both in your family and business,” says Julie Caperton, head of The Private Bank and Wells Fargo Partnerships, Wealth & Investment Management, Wells Fargo Bank, N.A.
The overlooked connection: Business and personal wealth planning
Many baby boomer business owners are navigating complex decisions about how to exit their businesses. Yet, one of the most overlooked aspects of this process is the interconnection between business and personal wealth planning.
Caperton believes clients are best served by a strong collaboration between commercial banking and wealth management. She works extensively with Suzanne Morrison, head of commercial banking and wealth partnership, Wells Fargo Bank, N.A. Morrison emphasizes that these two areas are intimately connected.
“This is about creating a more complete picture of what a successful transition looks like,” says Morrison. “You can help improve outcomes when you link your personal and business strategies.”
Morrison says many of Wells Fargo’s commercial clients are private, middle-market companies with significant value tied up in the business. Aligning business and personal strategies can help them filter through options that support both liquidity and legacy goals.
For example, this holistic connectivity can help business owners gain a clearer understanding of their company’s value, prepare the next generation to manage inherited wealth, and navigate complex considerations like tax strategy, liquidity planning, and charitable giving.
Planning the transition: Protecting value and preserving legacy
A thoughtful transition plan is essential to help ensure a smooth exit and protect the value and legacy of the business while aligning with owners’ long-term goals.
The first step is understanding what one owns. Many business owners don’t have a clear or current sense of their company’s value or how it fits into their net worth, which can lead to missed opportunities in tax planning, estate strategy, and succession design.
“A reality check is essential,” says Senior Lead Wealth Planning Strategist Mahesh Rao, Wealth & Investment Management, Wells Fargo Bank, N.A., “Whether they’re considering a sale or a family transition, they need to know what they own and what it’s worth. A professional valuation helps guide decisions about timing, structure, and strategy.”
When it comes to succession options, there is no one-size-fits-all approach, and each path comes with its own tax implications, liquidity considerations, and operational impact. But timing is everything. The earlier owners begin planning, the more tools and strategies they can have at their disposal, many of which may reduce taxes and increase flexibility. Consultation with a tax professional can be key.
Beyond the business: Preparing for personal finance future
As business owners prepare for a transition, the focus tends to be on the business itself — valuation, succession, and deal structure. Equally important is their long-term personal wealth strategy.
One of the most significant changes business owners face post-transition is the shift in how they generate income and how that income is taxed. The aggressive tax strategies they once relied on, such as large deductions tied to business expenses, often disappear, which can lead to a much higher personal tax burden. Working with a financial professional early helps ensure a personal wealth plan reflects the business owner’s new reality before the transition takes place.
“The biggest mistake we see is someone saying, ‘I’ve just sold my business and now I want to do some estate planning,’” says Senior Wealth Strategist Bob Petix, Wealth & Investment Management, Wells Fargo Bank, N.A., “By that point, many of the most effective tools may no longer be available.”
Defining what success looks like in this next chapter — personally, financially, and generationally — can translate liquidity into long-term impact. To help shape the next chapter, a business owner should consider:
- Defining what one wants their wealth to accomplish for themselves, their family, and their community
- Exploring advanced planning tools like irrevocable trusts, charitable giving vehicles, and tax-efficient investment strategies
- Coordinating with legal and tax professionals to help ensure alignment across the entire financial picture
The coming wave of business transitions is a defining moment for business owners, their families, and their legacies. Whether the goal is to help preserve family wealth, ensure financial security in retirement, or achieve a smooth exit, careful planning today helps lay the groundwork for long-term success.
1. “Small business closure crisis,” Project Equity, 2023
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