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Selling Smart: How Early Succession Planning Shapes Business Value
From valuation and buyer interest to confidentiality and key employees, our interview with Thomas Bevilacqua and Robert Bezede, partners at Harmony Succession Partners, delves into what every business owner should understand long before a buyer comes knocking.
How early should business owners start succession planning, and what are the biggest risks when it’s left too late?
Thomas Bevilacqua: Succession planning typically starts on a personal level: understanding why you want to sell and what you want your exit to look like. From there, it shifts to business readiness. In privately held businesses, we usually focus on three core areas: the quality of financial statements, tax planning, and the level of owner dependence. Succession planning takes time — typically multiple years. Ideally, business owners should begin planning two to three years before they intend to sell or retire. It’s also important to understand that selling a business and fully exiting it are not always the same thing. Even after a sale, owners are often required to stay on during a transition period. When succession planning is delayed, several risks can emerge. Valuation may suffer, there may be fewer qualified buyers, and tax inefficiencies can arise. Leaving succession planning too late often makes the process more stressful and limits options.
What can business owners interested in selling do to start sourcing potential buyers?
TB: There are many different types of buyers in the market. Broadly speaking, buyers fall into three categories: 1) strategic buyers are companies within the same industry — often competitors or businesses up or down the supply chain; 2) individual buyers may include high‑net‑worth individuals or search‑fund entrepreneurs, each with different motivations and deal structures; and 3) financial sponsors, such as private equity firms and family offices, are professional investors focused on deploying capital.
What steps can business owners take to ensure a potential sale remains confidential?
TB: Confidentiality is a cornerstone of a successful sale process. This starts with deciding when and how the business is taken to market. Positioning the transaction as a private sale and carefully controlling who receives sensitive information is essential. Owners should only engage with vetted, qualified buyers they trust and ensure information is shared in stages. A well‑managed, confidential process protects employees, customers, and the long‑term value of the business.
How does succession planning directly impact business valuation?
TB: Succession planning directly affects valuation because buyers are looking for predictability and reduced risk. A well‑prepared business signals stability, which increases buyer confidence. Buyers price businesses based on performance predictability and perceived risk. A strong succession plan — supported by a capable management team, formalized processes, and reduced owner dependence — lowers that risk. As risk declines, valuation tends to improve. Ultimately, succession planning is about identifying potential risks and proactively mitigating them.
What can sellers do to understand what their business is actually worth”
TB: Business owners should work with professionals who specialize in valuing privately held companies. Accurate valuation requires understanding both internal drivers of value and external market factors. This includes insight into buyer behaviour, financing conditions, macroeconomic trends, and the specific characteristics that drive value within a business.
Are valuation multiples typically industry‑specific?
TB: Valuation multiples do vary by industry, but the underlying business is often the most important factor. While certain industries tend to trade at higher or lower multiples, there is always a range within each sector. Where a business falls within that range depends on internal factors such as management strength, financial performance, growth potential, and risk profile. Every business is unique, so understanding the specific drivers of value is essential to determining what a business is truly worth.
What role do key employees play in a successful succession, and how do retention strategies factor into a sale?
Robert Bezede: Key employees are one of the most important drivers of business valuation. Buyers closely assess transition risk, and the less dependent the business is on the owner, the more valuable it becomes. Empowered, capable leadership teams increase buyer confidence and valuation. Employee retention, however, is nuanced. Owners must carefully decide when to involve key staff in the sale process. Disclosing too early can cause uncertainty, while disclosing too late may complicate buyer discussions.
An experienced advisor can help determine the right timing — whether that’s after an offer is made, just before closing, or even at closing itself — and design strategies to retain key personnel throughout the transition.
Why is maintaining good corporate records so important?
RB: Buyers typically review four to five years of financial, operational, and tax records. These records must be clean, accurate, and up to date. There’s a common saying: build your business as if you’re going to sell it—even if you don’t plan to. Businesses that are well‑organized, properly documented, and professionally managed tend to perform better regardless. Strong fundamentals not only improve sale outcomes but also lead to a healthier, more scalable business overall.
What is the single most important piece of advice you have for business owners thinking about selling?
RB: Start early. Preparing a business for sale takes years, not months. Tax structuring, building a strong management team, ensuring healthy customer relationships, and presenting clean financials all require long‑term effort. Ideally, owners should begin preparing two to five years before selling. When owners are forced to sell within 12 months, their options are extremely limited.
What happens when an owner has no plans to sell, but is approached by a buyer?
RB: This situation is more common than many people realize. When approached unexpectedly, the first step is to slow the process down. Buyers often try to move quickly, but this may be the most important transaction of an owner’s life. Owners should assemble the right advisory team before engaging further. It’s also critical to establish a clear valuation benchmark. If a buyer sets the price, it will likely be lower than what could be achieved in a competitive process. Even if the initial buyer ultimately proves to be the best fit, owners should protect themselves by understanding fair market value and ensuring they are not leaving money on the table.
Want to learn more about the legal issues surrounding succession planning? Join us on April 21, in Vaughan, Ont., at SUCCESSion, a one-day conference for business owners and executives looking to sell their business. Thomas and Robert will be the featured speakers in this session: Preparing for a Sale – Best Practices With Real Life Case Studies.