Do You Have Too Much Personal Wealth Tied to the Family Business?

September 8, 2021 by Interchange Capital Partners

By Ahmie Baum

If you’re like many business owners, most of your personal wealth is tied up in your business. This is great news, because it means you’re operating a successful business and hopefully cash flow isn’t an issue. However, it can be difficult to figure out how you can effectively exit your business while capturing all that value.

As you move into this next phase of your life, the reality of an exit or succession plan sets in, and you’re forced to make hard decisions about your business and those who rely on its success—including you. Luckily, there are ways to maximize the value of your business and ensure your personal wealth is protected as you pass on ownership.

Begin Your Exit Planning Early 

One of the most costly mistakes that business owners make is not starting early enough. A successful exit plan begins with enough time to strategize and implement how you will get the most value out of your business while mitigating taxes and creating enough value to maintain your lifestyle. In order to do this, you need to focus on converting your business wealth into personal wealth.

What most business owners don’t understand is that planning for a successful exit or succession is good business practice even if you don’t plan on leaving soon. 

Know What Your Business Is Worth 

When it comes to putting a price tag on your family business, it’s not as simple as you may think. It’s important to know all the details of what makes your business marketable to a buyer. 

Some of the most important factors are a strong management team, a diversified customer base, and strong cash flow. Some less obvious factors include your physical assets, such as the building from which you run your business, along with your equipment. Additionally, digital assets, such as your website and online presence, are part of your business value. 

Most business owners don’t think about all the pieces that create value. That’s why it’s important to have a business valuation done, and we would suggest an informal one to begin with, which is less expensive. Too often business owners run to a formal valuation at great expense and time without yet knowing the direction. Knowing the true value of your business is critical to proper business planning and achieving personal goals. A good informal valuation process can help answer the questions that will lead you to make informed decisions for your future.

Ensure That Your Business Can Operate Without You

This is one of the hardest parts of planning for your business yet the one that significantly increases the value. Buyers pay for self-managing companies where the owner is not critical to the future viability of the business. This is a harsh reality for some business owners. It involves having a strong management team in place with good processes to deliver stronger profits and cash flow into the future.

The most devastating scenarios can happen to us when we least expect it, whether that’s disability or death, and you must be prepared. Most experts suggest a buy-sell agreement linked with a life insurance policy so that your family and business are protected. Another part of succession planning that some business owners might not know about is getting coverage on key employees who can successfully run your business in your absence.

However, if you don’t have someone to pass it on to, it might be wise to start thinking about how you can effectively sell your business while retaining its value—another reason why starting sooner rather than later would be important.

Helping You Develop a Clear Vision of Your Future 

Owning a family business isn’t for the faint of heart. We at Interchange Capital Partners know the challenges you face and how hard it can be to juggle the various decisions that will impact your family, business, and community; not to mention the challenge of having enough time to devote to this important as well as critical initiative. Why, because we are a family business as well. We want to take the pressure and stress out of planning for your financial future, and help you achieve your aspirations and dreams for your family and your business.

You deserve all the insight and information you can get, which is why we provide resources to help you gain clarity and improve your understanding of your situation. We are a team of professionals who sit where you sit and face the same challenges you do. If you want to ensure your future and your family’s future is protected, email us at or call our office at 412-307-4230 to schedule an introductory appointment.

About Ahmie

Ahmie E. Baum is the CEO and founder of Interchange Capital Partners, an independent registered investment advisory firm providing collaborative, comprehensive, and disciplined wealth management around Transition Planning Unlocking a Lifetime of Work. With over 40 years of experience, Ahmie specializes in serving individuals, professionals, and family-owned businesses, helping them manage the complexity that comes with their unique circumstances. He is known for giving his clients guidance, education, and resources to make wise financial decisions that help them protect their wealth while achieving their goals. Ahmie and his firm strive to go above and beyond with their unparalleled client service and family office services that help their clients experience confidence in their future. 

Ahmie graduated from the University of Pittsburgh with a bachelor’s degree in psychology and holds the Executive Certificate in Financial Planning from Duquesne University School of Leadership and Professional Advancement. He is also a CERTIFIED FINANCIAL PLANNER™ professional. He recently received the Certificate for Family Business Advising (CFBA) from the Family Firm Institute. He spent 42 years working at EF Hutton and UBS, where he earned the prestigious Wealth Advisor designation. Nationally recognized, Ahmie has been named in the past to the Barron’s Top 1,000 Financial Advisor List. When he’s not working, Ahmie enjoys spending time with his wife, Sara, their three children, and their granddaughter. He also enjoys investing in his health through yoga, meditation, and plant-based eating. His other hobbies include woodturning, golf, reading, listening to music, and biking. He is active in his community and serves as the Foundation Chair of the Jewish Federation Community Foundation of Greater Pittsburgh and supports the Big Brothers Big Sisters of America (BBBS). To learn more about Ahmie, connect with him on LinkedIn. You can also watch his latest webinar on The Hidden Dangers of Not Having an Exit Plan.

Interchange Capital Partners, LLC, (“INTERCHANGE CAPITAL PARTNERS”) is a registered investment adviser with the Securities and Exchange Commission providing investment advisory and financial planning services. Any reference to the terms “registered investment adviser” or “registered” does not imply that INTERCHANGE CAPITAL PARTNERS or any person associated with INTERCHANGE CAPITAL PARTNERS has achieved a certain level of skill or training. A copy of INTERCHANGE CAPITAL PARTNERS’s current written disclosure (ADV 2A Firm Brochure) discussing our advisory services and fees is available for your review upon request. INTERCHANGE CAPITAL PARTNERS, in addition to providing investment advisory and financial planning services, provides business consulting services. In connection with its business consulting services, INTERCHANGE CAPITAL PARTNERS does not provide tax or legal advice.

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