Michael J. Cassata has managed enough ownership transitions to know there's one common misconception: Many owners think succession planning begins when they're ready to leave.
Instead, that's often when business owners discover that many of the decisions that affect long-term value should have been considered years earlier.
"Current market dynamics favor the well prepared," said Cassata, business owner advisory strategist with Rockland Trust Bank Investment Management Group. "Preparation gives owners options that ultimately create durable value."
Across New England, a growing number of privately held companies are approaching one of the most significant business events they'll ever face. More than half of privately owned businesses in Massachusetts, New Hampshire and Rhode Island are owned by people nearing retirement age, a demographic shift often referred to as the "Great Ownership Transfer." Behind every statistic is a person making critical decisions.
As more business owners consider retirement over the coming decade, preparation may become one of the biggest differentiators in helping business owners maximize value while preserving their legacy.
Business readiness is an ongoing strategic effort
Greg Batsevitsky, senior vice president, middle market and corporate banking regional executive at Rockland Trust, doesn't separate succession planning from running a successful business. In his view, they're closely connected.
"We see business readiness as an ongoing process, not a transaction," he said. "A business that's consistently improving has more flexibility when opportunities arise."
For Cassata, readiness starts with one question: Could the business continue to thrive without its owner?
The dependency on a business’s owner remains one of the biggest factors affecting its value and transferability. Buyers want organizations with experienced leadership teams, diversified customer bases, dependable vendor relationships and financial reporting that clearly demonstrates strong performance.
"The businesses that realize a premium value are those that can operate in a reliable, consistent manner," Cassata said. "The owner may still be involved, but the customer’s experience isn't dependent on the owner’s direct involvement."
That principle applies whether the company manufactures products, manages projects or delivers professional services. Durable revenue, documented processes and a capable leadership team increase confidence that the business can continue growing.
Building value
While a company's final value may be measured at the time of sale, it’s created over years of deliberate planning and decision-making.
For Batsevitsky, scalability is one of the strongest indicators of long-term value. Businesses with documented operating procedures, formal sales processes, consistent pricing and disciplined financial controls are often positioned to grow more efficiently while inspiring greater confidence among lenders and buyers.
"Those are conversations we encourage owners to have long before they're thinking about a succession event. It is the owner’s lasting legacy," he said.
Operational details matter too. Slow-moving inventory, declining margins, cybersecurity practices, internal controls and leadership succession influence how resilient a business appears to future buyers. Protecting value increasingly means reducing risk as much as driving growth.
“Preparation creates options, options create value,” Batsevitsky noted.
Benchmarking reveals hidden opportunities
For owners who have spent decades building a successful business, conducting a thoughtful assessment using independent benchmarks provides valuable insights regarding the readiness of the business.
By comparing financial performance and valuation drivers against industry trends, Cassata helps owners understand business operations and identify improvements that have the potential to significantly increase enterprise value.
"Business owners often think improving margins will have a modest impact on value," he said. "But those improvements can have a multiplier effect."
Those businesses with strong margins command a substantially higher EBITDA (earnings before interest, taxes, depreciation and amortization) multiple than competitors, creating meaningful gains in value without years of additional growth.
The conversation shifts from "Am I ready to sell?" to "What can I improve over the next three to five years?"
Every transition is different
Some owners envision passing the business to a family member or longtime manager. Others determine that selling to a strategic outside buyer offers the best path forward. Each option presents different financial and personal considerations.
"It's easy to say you want to consider owning a business," Cassata said. "It's much different when that same person begins to understand the obligations."
He recalls one management team that intended to purchase a successful company before ultimately deciding the financial obligations were greater than expected. The business was well managed and not reliant upon the owner, which made it an attractive target for a private equity buyer. The acquirer retained the management team, giving the owner liquidity while preserving continuity for employees and customers.
Family transitions can be equally complex. In one case, restructuring the owner's succession plan ultimately preserved both the father's legacy and his relationship with his son.
Those experiences reinforce an important point: Succession planning isn't simply a financial exercise. It's about balancing business objectives, personal relationships and the lasting legacy that owners hope to leave.
Creating optionality in a changing market
As ownership transitions accelerate, buyers are looking beyond strong financial performance to determine whether a business can continue succeeding under new ownership. "It's no longer enough for revenue to be durable," Cassata said. "It also has to be transferable." Customer contracts, operating procedures, leadership development, cybersecurity and internal controls influence how easily a business can change hands while maintaining its value.
For Batsevitsky, that's why conversations around ownership transition shouldn't wait until there is an imminent financial need.
"Our role is to help owners build value long before there's a financial need. A good commercial banker isn’t just financing the business today. Bankers can provide market intelligence and valuable insights helping owners identify obstacles and opportunities long before they become visible in the numbers" he said.
The most successful ownership transitions begin with deliberate decisions that strengthen the business over time, expand future options and help ensure the company's value reflects its true potential.
Rockland Trust helps owners navigate every stage of a business transition, from understanding current enterprise value and benchmarking against industry peers to evaluating succession strategies, increasing business readiness and coordinating with trusted advisers to support their needs today and in the years to come.
Jon Feld is a freelance writer for The Business Journals Content Studio.
