Business Succession: Planning an internal takeover

Preparation – and a little insider training – can help you seamlessly pass your business to a nonfamily successor.

Someone who knows the ropes. Someone who can preserve the culture. Someone who’s a known quantity to colleagues and clients. Someone who’ll run things like you would – or at least in a way you’d approve of.

For many business owners, these are the boxes they want a successor to tick.

According to a 2025 study conducted by Raymond James, 23% of owners surveyed said they planned to transition their businesses to nonfamily internal stakeholders. For context, roughly the same number reported planning an external sale, while the majority – 35% – plan on having a relative take over.

“Transition to an internal stakeholder can be a great option for an owner whose priorities are maintaining company culture or retaining some measure of control or involvement going forward,” said Beth Dominguez, a private wealth consultant at Raymond James.

Drawing on Beth’s insight, this article explores the consideration set for owners who want to hand the reins off to someone who really understands their business.

Step 1 – Have a plan

Mapping out your exit strategy is perhaps an obvious first move, but it’s one many owners don’t make until they have to – which is why it’s the step Beth emphasizes most.

Documenting your intentions will not only make things more formalized for eventual execution, it will also encourage you to think more completely about the process:

• Where does the business stand today?
  • What’s going well? Where are the opportunities? What is it worth?
• What are your goals for its future?
  • Do you anticipate expansion? Will growth be organic or strategic?
• What will it take to achieve those goals?
  • Is your current team capable? Will you need to hire additional support? Will you need to develop or expand your own skills?
• What are your personal goals?
  • Will you continue working in the business or move on to a new venture? Is retirement your next step?

The earlier you start the process, the more runway you give yourself to answer these questions and bring the plan to fruition, says Beth.

“The owners who are most successful in their transitions have always treated their business as if they’re going to sell it.”

Step 2 – Don’t assume your preferred candidate wants the job

As with family succession, the next question is one you’ll need to ask the candidate: “Are you interested?”

It’s easy to imagine that someone who loves working in the business would also love running it, but top performance doesn’t necessarily translate into an aptitude (or appetite) for leadership.

As Beth puts it, don’t assume the employees you think are awesome have the same vision, for themselves or the business, as you do.

“I’ve had situations where owners always planned on certain employees buying them out, only to discover in the eleventh hour that they had no interest.”

Step 3 – Do ensure your candidate is equipped to succeed

In addition to wanting the job, it’s critical that an internal candidate has the ability to do it. And if they aren’t quite where they need to be, the question becomes, can you get them there?

Building up a candidate can take several forms:

• In-house mentoring and shadowing
• External networking and participation in industry organizations
• Industry certifications or related degrees

You should also consider the more material demands of development and explore increasing a candidate’s salary, expanding their benefits, or maybe even purchasing a wardrobe that helps them look the part.

However, if you don’t have an obvious internal candidate, this could also be an opportunity to “build your own” through an early external hire. According to Beth, you can “imagine the criteria you’d look for in a potential buyer and hire that person now.”

Step 4 – Get on the same page

Once you know a candidate wants the job and has the skills to take it on, the next box to check is whether your objectives align.

For instance, if you plan to stay very involved day-to-day after exiting your financial stake, have you defined what your role will be vs. your successor’s? How will those roles evolve and on what timeline?

This is also when you’ll need to start considering if the business itself is aligning with your plan. Have you institutionalized your client and/or vendor relationships, or are most of them used to dealing only with you? Have you delegated enough of your role that others know what it takes to do your job? Does everyone on the team know the plan and their roles in it?

Step 5 – Know what it will cost

Finally, we come to the point the planning hinges on: the sale of the business.

As you’re assessing a candidate’s professional and personal readiness, their financial ability to make the purchase must also be negotiated.

“The three legs of the stool have to align,” Beth says. “The personal, the business and the financial.”

Is the successor willing to mortgage their home? Would they need to? Are they going to cash in all or part of a 401(k)? Do they qualify for a Small Business Administration loan?

Or will financing come through the company or directly through the owner?

That could look like setting growth goals that result in additional shares or, if there’s time, an installment sale over a number of years.

Beyond the financial costs, it’s important to remember and factor in the emotional expense of an exit. How prepared are you to move on? Do you have a new venture in mind? A professional reinvention to pursue? Big personal goals you’ll now have the bandwidth to achieve?

Because ultimately, Beth says, before you can prepare anybody else to purchase your business, you have to prepare yourself to let it go.