By John Chionchio, Partner — WealthPoint Business Advisory Services
If you own a successful privately held business, you’ve probably spent years learning how to operate it well.
But how much time have you spent learning how to own it well as a financial asset—and ultimately monetize it?
That distinction can be worth millions of dollars.
Your Exit Timeline Can Change
After working with more than 350 owner and family groups, we’ve seen exit plans change dramatically:
A 10-year plan became an immediate opportunity when an owner discovered a monetization strategy that could accomplish their objectives sooner.
A 2-year plan became a 5-year plan when the next generation wasn’t ready to successfully run the business and retirement funds were at risk.
A 5-year plan became a zero-year plan when an unexpected health event forced an owner to sell immediately and take whatever they could get.
The lesson is simple:
You can’t control everything that happens to you—but you can control how prepared you are when it does.
And preparation starts with understanding your options.
Why ESOPs Deserve Your Attention
There are more than ten ways to monetize ownership in a privately held business.
An Employee Stock Ownership Plan (ESOP) is one of the most unique.
Depending on the circumstances, an ESOP can potentially allow an owner to:
- Monetize their ownership for much more than a financial third party sale.
- Transition ownership to employees, elevating their retirement lifestyle
- Preserve the company’s culture and legacy
- Continue operating the business however you choose for as a long as you choose
- Achieve significant tax advantages for both the business and the sellers
An ESOP isn’t right for every business or every owner. And because ESOP transactions are complex, how they are designed and followed through after the transaction matters enormously.
But that’s precisely why you should understand them before deciding whether one belongs in your exit strategy.
The 8% Problem
The Exit Planning Institute’s 2023 survey of business owners following a third-party sale found that fewer than 8% were happy with their outcomes.
Think about that.
Your business may represent decades of work, your family’s financial security and a significant part of your legacy.
Yet most owners aren’t happy with how the story ends.
One reason is simple:
Building a great business and preparing a great financial asset for exit are two totally different skill sets.
Once you’re ready to sell, it may be too late to fix what wasn’t prepared.
The Question Isn’t “Should I Do an ESOP?”
The better question is:
“Could an ESOP help me achieve the exit I actually want?”
Answering that requires understanding your goals, your business, your financial needs and your alternatives.
That’s the purpose of my Little Known ESOP Exit Strategy Secrets series—to help business owners understand this powerful but complex strategy before they need it.
You may ultimately decide an ESOP isn’t right for you.
That’s okay.
The objective isn’t to sell you on an ESOP.
It’s to make sure you understand your options while you still have time to act on them.
Your business took years to build.
Don’t wait until you’re ready to leave it to learn how to exit it.
If you’re thinking about monetizing or transitioning your business in the next 3–10 years, let’s start the conversation.
John Chionchio
Partner, WealthPoint Business Advisory Services
johnc@wealthpoint.net
The sooner you understand your options, the more control you have over your exit.
