Business Succession Planning Checklist for Arizona Owners

Transitioning out of your business is the most significant financial event of your life. Yet, a staggering number of business owners in Arizona have no formalized succession plan. Whether your goal is to sell to a third party, pass the company to the next generation, or execute a management buyout, you must prepare years in advance. Use this checklist to evaluate your readiness.

Phase 1: Valuation and Assessment

• Formal Valuation: Have you obtained a certified business valuation within the last 12 months?
• Owner Dependency: Can the business operate for 30 days without your involvement without losing revenue?
• Financial Audits: Are your financial statements reviewed or audited by a CPA firm?

Phase 2: Corporate Protection

• Buy-Sell Agreement: Is your buy-sell agreement up to date and legally binding?
• Funding Mechanism: Is the buy-sell agreement fully funded with life and disability insurance reflecting the current valuation?
• Key-Person Coverage: Do you have insurance policies on your top revenue generators and technical experts?

Phase 3: Executive Retention

• Golden Handcuffs: Do you have deferred compensation or phantom stock plans in place to retain key management during the transition?
• Employment Contracts: Are non-compete and non-solicitation agreements updated and enforceable under current Arizona law?

Phase 4: Wealth and Estate Integration

• Estate Tax Exposure: Have you modeled how the sale of the business will impact your personal estate tax liability?
• Trust Structures: Are your corporate shares held in an appropriate trust (e.g., Revocable, SLAT, BDIT) to avoid probate and protect against creditors?
• Post-Exit Income: Have you coordinated your retirement income strategy to ensure you don't outlive the proceeds of the sale?

If you answered "No" to more than two of these questions, your enterprise value is at risk. Succession is not a single event; it is a multi-year process of de-risking and optimizing your corporate structure.

Frequently Asked Questions