For financial advisors guiding business owners toward a sale or succession, the years leading up to a liquidity event are as critical as the closing itself. Experts warn that treating transaction tax planning like routine annual compliance can lead to significant value erosion, turning a carefully built enterprise into a tax liability minefield.
Jeff Getty, chief tax strategist at Callan Family Office, distinguishes between annual tax planning, which he calls episodic, and transaction planning, which he describes as architectural. In his view, the tax outcome is not determined at closing but is shaped over years through decisions about ownership structure, trust design, charitable intent, state residency, and post-sale capital deployment. “Waiting too long turns planning from a design process into a salvage exercise,” Getty said. He notes that founders often delay because the business demands their attention and a future exit feels uncertain, but that uncertainty creates a false sense that planning can wait.
Getty emphasizes that strategies requiring time and sequencing, such as qualified small business stock (QSBS) planning under Section 1202, must be addressed before ownership issues become difficult to fix. Similarly, loss-generating strategies designed to offset future sale proceeds need time to develop and align with transaction economics. Charitable transfers through split-interest trusts, donor-advised funds, and private foundations should occur before assignment of income issues arise. State tax planning using trusts in Delaware, Nevada, or South Dakota should be completed before residency facts become hard to defend. Asset protection structures, including offshore and domestic asset protection trusts, are strongest when established before creditor or transaction pressure exists.
Leveraged estate and gift tax strategies, such as grantor retained annuity trusts (GRATs), spousal lifetime access trusts (SLATs), and family limited partnerships (FLPs), lose impact when delayed. “These strategies can still be effective, but they are materially enhanced when valuation discounts are available and future appreciation can be shifted before the transaction becomes too defined,” Getty said. If planning waits too long, valuation enhancements may be reduced or lost entirely.
Jacobo Taurel, managing partner at Activest Wealth Management, warns against treating a liquidity event as a single date on the calendar rather than a five-year planning window. “Founders wait until a term sheet is in hand to start thinking about gifting equity, funding trusts, or structuring around Section 1202. By then the IRS sees the transaction value, and what could have been transferred at a low basis becomes very expensive to move,” Taurel said. He advises advisors to maintain a cadence that respects the founder’s time: a short quarterly working session, one annual deep dive with the CPA and estate attorney, and an open line for material changes. “The advisors who keep the relationship are the ones who bring frameworks instead of products, and who are willing to coordinate with the founder’s other professionals rather than compete with them,” Taurel added.
Ben Domingue, founder and managing partner at Family Office Partners, observes that founders typically focus on enterprise value, valuation multiples, and deal negotiation while spending little time on transaction structure, ownership structure, and tax strategy. He cautions that most owners rely on existing advisors who may excel at annual tax compliance but lack specialization in advanced transaction advisory, estate planning structures, or pre-transaction tax strategy. “Current advisors absolutely should remain at the table, but owners also need specialists whose entire practice is focused on transaction structuring, trusts, estate strategies, and sophisticated tax planning related to liquidity events,” Domingue said. He notes that many owners are unaware these professionals exist and mistakenly assume that all CPAs, financial advisors, or estate attorneys possess the same skill set.
The stakes are high as the $84 trillion wealth transfer accelerates, with many business owners facing liquidity events in the coming decade. Advisors who can coordinate tax, estate, and transaction specialists stand to provide significant value. As Getty puts it, the advisor’s job is to identify key decision points, determine what is time-sensitive, what can be deferred, and what should be monitored so the founder can keep building the business while preparing for the consequences of success.
For advisors, the message is clear: the tax result is not created at closing. It is shaped over years through deliberate, architectural planning. Those who wait risk turning a design process into a salvage exercise, with potentially millions of dollars at stake.
