There is no universally correct answer. What is universally true is that the tax engineering required to optimize any of these structures takes years, not months.
7. Create a Succession Advisory Team
Yes, you have your family’ s support as you build your succession plan.
But you’ ll also need a lot of outside counsel to ensure you optimize your financial position and leave the legacy you’ ve been envisioning.
A complete transition advisory team for your business might include: A transaction attorney experienced in business transfers. A CPA with manufacturing depth and succession tax expertise. A valuation specialist. A financial planner who understands the owner’ s personal liquidity needs post-exit. An M & A advisor who understands the manufacturing acquisition market( if third-party bids are being considered).
8. Plan How the Business Funds Your Exit
A complex layer to this equation is finding the right financing structure that works for you and your family.
You’ ve got a few options.
In a third-party sale to a well-capitalized buyer, this is relatively straightforward. In a family transfer or management buyout, it’ s not.
Your successors, regardless of whether they’ re family members, an employee group, or strategic or financial acquirers rarely have the appetite( or the capital) to acquire a $ 15M manufacturing company outright. What fills that gap is often seller financing: a structured arrangement in which the outgoing owner carries a portion of the purchase price over time, functioning as the lender in their own exit.
Seller financing, installment sales, and earn-out structures are legitimate and frequently used tools, but each carries meaningful tax implications, cash flow dependencies, and personal financial risk for the exiting owner.
You’ ll want to ensure your team helps you build a communication strategy for your exit plan— to decide in advance who needs to know what, and when, so you control the narrative rather than leaving a vacuum that rumors fill.
What most family manufacturers discover when they finally assemble this team is that the advisors had not been talking to each other. The attorney structured the buy-sell agreement. The CPA filed the returns. The financial planner managed the owner’ s personal portfolio. No one was coordinating the overall strategy. That communication gap can result in massive business risks, including excess time and expenses you don’ t want or need.
Building your team early and ensuring they work from the same plan, is what makes a succession strategy executable rather than aspirational.
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