A few weeks ago, I was talking with some colleagues, professionals I’ve known for years, about how people in their fifties and sixties are running professional practices, businesses they’ve spent decades building, and when you ask what happens once they walk away, the answer is usually vague. A partner will take over. A kid will take over. Someone will figure it out eventually.

That’s not really a plan and unfortunately hopes don’t tell you where the cash comes from.

What “someone will take over” actually skips

Succession gets talked about as a people question constantly, who’s ready, who wants it, who deserves it. The financing side barely comes up, even though that’s usually what decides whether the transition survives.

Take the owner whose kid is going to buy in. Nobody’s priced what buying out the siblings who aren’t involved will cost, or where that money is supposed to come from. Or the partner who’s buying out the founder at retirement, on terms everyone agrees are fair, except the payment schedule ends up starving the business of the working capital it needs just to keep running. Or the founder who figures the business will sell for whatever it’s worth, without anyone asking how the buyer is actually going to finance that price.

The intentions are almost never the problem. The cash mechanics are.

What the money side actually looks like

Valuation isn’t one number. A minority stake and a majority stake price differently, because control is worth something, usually 20 to 50 percent more for the stake that actually runs the business. And if you’ve been paying yourself below or above market salary for years, that number has to get corrected before anyone can trust the valuation at all.

Seller financing is common, and it changes who you become. Under an installment sale structure, you can spread the tax on your gain across the years you actually receive payment, instead of owing it all at once. But you also become a creditor of a business you no longer control, which is a different relationship than the one you had running it.

Bank financing comes with rules most people never look up until they’re in the middle of a deal. SBA 7(a) loans can fund a partner buyout, sometimes the full amount, if the remaining business’s cash flow supports the debt. The buyer typically needs to put in at least 10 percent, with half of that from their own funds rather than borrowed money, and the rest can sit as seller financing on standby, which means the seller doesn’t see that portion for a couple of years while the bank gets comfortable.

When buyer and seller can’t agree on price, an earnout sometimes bridges the gap, tying part of the payment to how the business performs after the sale. Useful, but it also means part of your payout depends on decisions you no longer get to make.

None of this is hard to understand once someone lays it out. Most people just never see it laid out until they’re already negotiating, trying to solve a financing problem and an emotional one at the same time.

Where to actually start

Get a real valuation, one that separates what a minority stake is worth from what a majority stake is worth, and that corrects your own compensation to something closer to market rate.

Model the buyout the way a lender would. Base it on what the business’s cash flow can actually support, not the number you’d like to retire on.

Decide, on paper, who’s carrying the financing risk. You, through an installment note. A bank, through an underwritten loan. Some combination of both. That choice shapes everything that comes after it.

And if a bank could ever be part of this, keep your financials clean starting now. Lenders want years of clean numbers before they’ll finance a buyout, and you can’t produce that after the fact.

Cafecito Takeaway

I brought this up with my colleagues because I keep running into it, and I don’t think it gets said plainly enough. It’s not the missing successor that worries me most. It’s the missing financing behind that successor.

Wanting someone to take over your business isn’t the same as building a structure that lets them actually pay for it without wrecking what you spent years building.

If you’re the one handing it off, or the one buying in, ask the real question. How does the cash move, specifically, from their hands to yours. Ask it now, on paper, before it’s the only conversation left to have.

“Someone will figure it out” is usually just what people say right before nobody does.