The author, at Rockefeller Capital Management, argues that when it comes to business sales, the most successful outcomes are often achieved by the business owners who begin planning long before a sale is in motion.

The following article concerns the kind of preparation that must take place before a liquidity event such as the sale or flotation of a company. There is the old saying of “fail to plan means plan to fail” and that certainly applies to liquidity events. Wealth advisors know too well that it is important for business owners to get ready for liquidity events. 

The author of this article is Timothy Laffey, head of wealth strategy and planning, Rockefeller Capital Management. The editors of this news service are pleased to share these insights; the usual editorial disclaimers apply to guest articles. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

For many business owners, selling a company marks the culmination of decades of hard work, and a significant wave of ownership transitions is on the horizon. As Baby Boomers retire, six million small and medium-sized businesses are expected to face ownership transitions by 2035 according to McKinsey. More than one million businesses are viable candidates for sale, representing as much as $5 trillion in enterprise value (1).

A sale is usually the largest financial event of a business owner’s life, and one they may have spent years preparing for. But in many cases, as the business grows and the possibility of a liquidity event draws closer, critical life and wealth planning considerations fall to the wayside.  Once a transaction is nearing, owners are focused on maximizing valuation, negotiations, and due diligence. But some of the most significant decisions affecting their family’s future, such as wealth planning, charitable goals, after-tax proceeds, and legacy, should have been addressed months or even years earlier. 

Financial planning can seem tedious, and estate planning is typically associated with planning for the worst. But the most successful outcomes are often achieved by the business owners who begin planning long before a sale is in motion. Early planning, as soon as you anticipate that a sale could take place, creates options and opportunities that can be lost without a thoughtful timeline. 

Consider your cash flow and lifestyle spending
Before evaluating sophisticated tax strategies or estate planning techniques, business owners should consider a more fundamental question: What will life look like after the sale? 

Business owners typically use income from their business to support their family’s lifestyle. Following a liquidity event, that equation changes. Income may now come from investments, deferred compensation arrangements, ongoing involvement with the company, or proceeds generated at closing. Understanding future spending needs, anticipating income sources, and establishing long-term financial goals helps to create a solid foundation for every planning decision to follow. 

Just as important and critical to creating a solid foundation, business owners should model various sale scenarios with their tax and financial professionals to develop a realistic understanding of the after-tax proceeds they are likely to receive. 

Once these critical numbers are understood, families can explore more advanced planning strategies.

Plan early and intentionally
One of the most common mistakes I have seen business owners make is assuming that they can address wealth transfer, tax planning, and philanthropy after a deal is signed. But the most tax efficient strategies require forethought. 

Business owners who plan early may have opportunities to transfer interests in the business to family members, irrevocable trusts for their benefit, or charitable entities before a sale, which can create meaningful tax efficiencies. 

A liquidity event often also prompts discussions about giving back. Philanthropy, as well as any income tax benefit from the giving, are often most effective when there is an intentional strategy, rather than quick decisions made at the time of a transaction.

For example, families hoping to make a large impact with philanthropy can consider gifting ownership interests in the company to a charitable entity, such as a donor advised fund (DAF). This can provide a charitable income tax deduction for the business owner, eliminate the income tax the business owner would otherwise pay on the gifted interests, and allow the DAF to receive the proceeds of the sale, and any subsequent income and growth, income-tax free to be used for the family’s future charitable giving. This strategy can help amplify a family’s charitable impact. This strategy, however, may only be possible well before a deal is agreed.  

Spend time on estate and gift tax planning 
Business owners should also think about how they will balance their current lifestyle spending with any long-term estate tax planning they may wish to accomplish. Planning well in advance of a transaction can allow business owners to accomplish significant estate tax planning, not only for themselves, but also for future generations.  

One option is to establish an irrevocable trust for a spouse or descendants, and gift interests in the company to the trust, using the donor’s lifetime gift exemption. Doing so well in advance of the sale allows the value of the company, and all subsequent appreciation, to be removed from the donor’s and the beneficiaries’ estates, if the trust is properly structured.  

The initial gift to the irrevocable trust may qualify for certain IRS-permitted valuation discounts, which allows the transfer to be made in an even more gift tax-efficient manner. Irrevocable trusts can also provide broader planning benefits, serving as a tool to help determine how wealth is passed to future generations, establish any guardrails, protect assets from creditors and divorce, and ensure that money is handled according to the wealth creator’s wishes.

Prepare heirs for success beyond finances
While irrevocable trusts can prepare a business owner’s heirs for success, preparation should extend beyond asset structures.

I encourage families to start discussing their wealth planning long before decisions are made. Family meetings focused on financial education, family governance, and stewarding wealth can help establish shared values, purpose and expectations, and enable future generations to develop the skills and perspectives they need to preserve wealth over the long term. These less tangible conversations are often more important than simply the numbers.

Build the right team
A liquidity event touches nearly every aspect of a family’s financial life. Wealth planning, taxes, estate planning, investment management, and philanthropy all intersect. Because of that complexity, business owners should surround themselves with a team of trusted experts who work in sync and understand the ins and outs of their business and their future financial goals. Key advisors can include a wealth advisor, a CPA, and a tax and estate planning attorney. 

While all business owners should be thoughtful about their personal wealth, planning for a liquidity event makes it even more important. I urge the business owners I work with to start the planning process as early as possible to have multiple paths to help achieve their financial and estate planning goals.

Footnote
1, McKinsey & Company, The Great Ownership Transfer: A new era of business stewardship, February 2026

About the author
Timothy Laffey leads Wealth Strategy & Planning within the Rockefeller Private Office, where he oversees the wealth strategy and private wealth planning teams. He collaborates across the organization to advise clients on executive compensation, private equity, multi-state taxation, and estate, gift, and generation-skipping transfer (GST) tax matters. He also supports family office tax teams and helps establish tax policy for the family office.

Before joining Rockefeller, Laffey was a senior vice president and senior wealth planner in Wells Fargo Private Bank’s regional wealth planning group and practiced law in the personal law group at Morgan, Lewis & Bockius. Throughout his career, he has advised ultra-high net worth clients on income, estate, gift, and generation-skipping transfer tax planning, as well as business succession and philanthropic strategies. He began his career in Deloitte Tax’s private client advisors group.
Laffey earned his accounting degree, magna cum laude, from the University of Scranton, and his JD and master of laws in taxation from Villanova University School of Law. He is admitted to practice law in Pennsylvania and New Jersey.

Disclaimer
The publication includes views and opinions of the author as of the date of publication and is subject to change at any time. This material is for informational and educational purposes only and should not be construed, as accounting, tax or legal advice. You should consult and review any planned financial transactions or arrangements that may have tax, accounting, or legal implications with your legal and tax advisors. Rockefeller Capital Management and its affiliates do not provide legal or tax advice. 

Certain information has been obtained from, or is based on, sources believed by Rockefeller Capital Management to be reliable, but Rockefeller Capital Management makes no representation as to their accuracy or completeness. Actual events or results may differ materially from those reflected or contemplated herein. The information does not constitute an offer to sell or a solicitation of an offer to buy interests in any Rockefeller Capital Management investment vehicle or product and should not be interpreted to constitute a recommendation with respect to any security or investment plan.