The Question Many Business Owner Ask — And Why the Answer Is Never Just About the Number

Consider this hypothetical:

A client calls. He'd just gotten an offer on his business. Good number. Better than he expected, honestly. He asks "What should I do?".

"What's the offer?" we ask.

He tells us.

"And what do you want your life to look like in five years?"

Long pause.

"I haven't really thought about that part."

That's where most of these conversations can actually start.

Selling can create a different kind of freedom — with its own tradeoffs

When you sell, that can offer liquidity. A lump sum that you can invest, live on, and use however you want. You're diversified. You're no longer dependent on one business for your financial life.

That's genuinely valuable. Especially if you've been running the business for 20 years and a large portion of your net worth is tied up in it.

But selling also means giving up the ongoing income. It means giving up control. And depending on how the deal is structured, it create a significant tax event that reduces how much you actually walk away with.

Keeping it for income has its own calculus

On the other side: if the business is profitable, well-managed, and doesn't require your constant presence, keeping it may be an excellent income source in retirement. You stay involved at whatever level you choose. You benefit from continued growth. You maintain optionality.

The risk is concentration. The business represents a large chunk of your net worth and your income. If something changes — the market, your health, a key employee leaves, a competitor shows up — that income isn't always guaranteed.

The decision framework we use

When we sit down with someone on this question, we're really trying to answer four things: What do you actually want your retirement to look like? Do you have enough outside the business to support that life if the business stopped tomorrow? What's the real after-tax number if you sell? And what's your appetite for continued risk and involvement?

Sometimes the math clearly points one way. More often, it's a values conversation as much as a financial one.

How we can help

Using the hypothetical example:

We worked with the business owners to complete a full analysis.  After taxes, the net from the sale was meaningful but not life-changing on its own. He had very little outside the business. And he realized he actually still wanted to be involved — just not at the same intensity.

Instead of selling, we restructured things so he could pull back, bring in a manager, and start building assets outside the business over the next five years. He'll revisit the sale question then.

That turned out to be the right call for him. But it wouldn't be for everyone.

If you've been thinking about this

The worst time to make this decision is under pressure — when someone's made you an offer, or when you're burned out, or when something has gone wrong. The best time is when you have optionality. When you can think clearly about what you actually want.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.