Thank you to FFI Fellow Patricia Annino, member of the 2025 Conference Program Committee, for this article about the many complexities to consider when a client wants to leave a family enterprise.

Paul Simon famously sang that there are fifty ways to leave your lover. In his words, “The problem is all inside your head. . .The answer is easy if you take it logically. I’d like to help you in your struggle to be free. There must be fifty ways to leave your lover.” ¹

Well said, and there are probably more than fifty ways to exit the family business. However, exiting the family business is often more complicated because an exit from the business is not, in most cases, an exit from the family. The choice of an exit path matters. Exiting well and remaining happy at family holiday parties matters.

Why would someone want to exit the family business?

There could be many reasons—even 50, but here are a few.

• Belief that some family employees are favored and that employment is not merit-based.
• Belief that the time does not sync with family member’s “best years.”
• Belief that contributions are not respected.
• Desire for a work/life balance that working in the family business cannot afford.
• Experiences stress will working in the business that affects mental health.
• Feelings that compensation is unfair.
• Frustrated by the lack of advancement in the family business.
• Frustrated by the business’s stagnation.
• Need to relocate for personal reasons, e.g., spouse’s or partner’s career, and working remotely is not the right solution.
• Other responsibilities, e.g., caregiver or young children, elderly parents, ill spouse or partner) that take priority.
• Passion for a different industry or field than that of the family business
• Sibling rivalry

Some Suggestions for Advisors in Working on Exits

Of course, the emotional issues that arise during a family business exit can be very strong. It is never just about the money. Feelings of guilt, fear, anger, rejection, entitlement, and lack of gratitude bubble under the surface. Those emotions cannot and should not be ignored. But they should be managed.

Here are 10 suggestions for advisors. (Not 50, I know!)

1. Encourage the client, before making any announcements or resigning, to openly, honestly, and privately communicate the concerning issues with the major stakeholders.
2. Assist clients to look objectively at the reasons for exiting and whether the issues facing them can be resolved without leaving.
3. Help clients recognize that the opportunity to work in the family business is one to be grateful for, and that the experience that has often been life-changing and, almost always, important.
4. Suggest that the client consider phasing an exit over time or taking a sabbatical before announcing the decision to exit the family business.
5. Explore intrapreneurship with the client. For example, consider having the family business create a subsidiary, owned by and funded by the common pot, that the client could run.
6. Work with the client to design what an ideal exit plan would be, keeping both the client and the business goals in mind, especially designing an agreement for the timing of the exit.
7. Guide clients to negotiate with a win/win mentality.
8. Take an active role in the transition. If the client is in a position of authority, make sure to plan out the succession, giving real thought to issues that could and will arise. A well-considered transition plan, carried out successfully, projects stability to employees and customers, as well as to bankers who trust the client’s management abilities.
9. Seek legal, financial, and tax advice.
10. Know that it is possible, if not typical, for a client to leave employment and still retain ownership.

And . . . here are 10 more. (Still not 50, but I’m getting closer!)

11. Make sure the client understands his or her financial security post-exit.
12. Understand the importance of timing, both for the client and for the business.
13. Think about whether others also want to exit and whether this presents an opportunity for the client to sell the entire business to another stakeholder or to a third party.
14. Understand that the timeline for ceasing employment may be different than the timeline for an ownership cash-out.
15. If the exit is a cash-out, make sure all parties understand the value of the enterprise and of the client’s interest. If the client is a minority owner, consider that his/her value will be discounted. Also consider that payment may not occur at once but over a period of years. If there is a buy-sell agreement in place, the client should review it (with advisors) and make sure to understand the process it outlines.
16. If the client’s interest in the family business is in a trust and not held outright, exiting may be trickier as the trustee holds control, is bound by any buy-sell agreement, and makes the decision.If the client’s interest is bound with others, e.g., siblings or children, an advisor may have to become very creative—perhaps by reviewing the trust document to determine if the client’s interest (or the interest of the client and his/her children) can be divided into a separate trust, so that this decision does not affect the other trust beneficiaries. Perhaps the trustee can decant the interest of the trust to a new one that allows for the division, if the document does not by itself provide the authority for the trustee to do this.
17. Keep the reasons for exiting confidential to protect the business and its reputation.
18. Work on a positive spin about the exit, for the sake of both the client and for the business.
19. Understand that in the personal and business communities, the client’s identity may be publicly entwined with the family business. Exiting may change social status or reputation in that community.
20. Execute well and move on with clarity and kindness.

Conclusion

Over the past few years, I have worked on four successful exits from a family business. The exit path in all three cases was a cash-out of the shares in the business, a ceasing of any employment in the business, and resignation from all board work. (Ok, I didn’t get to 50.)

Reference

¹ “50 Ways to Leave Your Lover,” track 4 on Paul Simon, Still Crazy After All These Years, Columbia Records, 1975.

About the Contributor

Patricia M. Annino, FFI Fellow, is an attorney with Rimôn, P.C., in Boston. A member of the 2025 Conference Program Committee, Patricia is the 2022 recipient of the Richard Beckhard Practice Award, a former member of the FFI Board of Directors, a founding member of the 2086 Society, and a frequent contributor to FFI Practitioner. She has been voted by her peers as one of the Best Lawyers in America, Estate Planner of the Year, and EuroMoney’s “Best in Wealth Management — USA.” She can be reached at patricia.annino@rimonlaw.com.