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Entrepreneur’s Wealth Digest

Business Owner Equity Planning with Multiple Owners – Part II

How do you close gaps that exist when partners need different things from the business? In my previous article I went through the first three phases of business owner equity planning with multiple partners. They are: clarify the current business strategy, get an updated business valuation, and individual partner personal planning. The outcome of those first three phases is to create awareness. Awareness of what the business is trying to accomplish over a specific timescale, what the business is worth and how to influence that number, and what the personal financial needs are for each individual partner. Phase IV is about taking that awareness and integrating it together into a unified strategy that meets the needs of each partner.

When we work on these Partner Aligned projects with our clients, we facilitate each phase. Phase IV is always the most nuanced because we usually uncover gaps in the current business strategy. These gaps are either a product of a lack of awareness of the individual goals of each partner, or a business strategy that isn’t set up to meet those goals.

They generally fall into one of three categories:

  1. Time horizon based
  2. Owner benefit need
  3. Exit outcome need

Let me dive a bit deeper into each category. Time horizon based issues come up when at least one partner has a different “end date” in mind for the business or at least for their involvement in it. These are most common when there is an age difference between partners of 10 years or more. It makes perfect sense to have a difference of need on the time horizon for an exit when you are in a different phase of life. We also see gaps when there is a different goal on the horizon for a partner. Perhaps they want to start a different business, become an investor, or simply share their knowledge via education. Whatever is causing the gap, there is always a solution, which I will get into at the end of the article. Being able to see the gap and make it visible to all partners is very important.

Owner benefit need gaps arise based on distributions to owners being insufficient for the ongoing cashflow needs of at least one partner. Here we are talking about a difference in partners’ needs from the business between now and the business exit date. They are frequently driven by one partner having more financial goals outside the business. These could be starting side projects or a second business, real estate purchases, or just a more expensive lifestyle. This can also present itself during specific life periods like having children at home or paying for a university education. As with a time horizon based gap, an owner benefit need gap is solvable.

Exit outcome needs can involve either the equity value of the business or the intended type of exit. If a partner needs $10M for their equity shares at exit but the business will only provide $7M based on the valuation, that is a clear gap. However, these gaps can also present themselves when one partner wants to do an external sale and another may want to sell to key staff internally. Thus, we are dealing with financial needs and legacy or impact needs as well. When we guide entrepreneurs through our Partner Aligned process we focus on the different methods that can be used to reach different targets.

Now that we have identified the gaps between partners, we get into the part of the planning process that is truly driven by the preferences of the partners on how they want to close gaps. You can adjust the timeline of the sale or buy a partner out earlier to close a time horizon gap. You can create different distribution plans inside the business to better meet the needs of partners for owner benefit. You can increase equity value by growing the business faster, taking on outside capital, or adding a few years to the exit timeline. The key in this discussion is to stay non-emotional and work on each gap to create a better, stronger business that serves the needs of each partner. One of the best ways to stay non-emotional is to bring in an outside mediator to help guide the discussion. We play this role during our Partner Aligned process, but if you want to run it yourself look for a peer, mentor, or even professional mediator to help guide the conversation. The key is to develop a business strategy that gets everyone where they need to be personally so that the business can thrive and deliver those results to the owners.


If you have a question or simply want to talk through your financial planning, we are here to help.

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Wealth Digest





DISCLOSURE: Jarrod Musick is an officer of Destiny Capital and Entrepreneur Aligned, a DBA of Destiny Capital. This article is for informational purposes only and should not be relied upon as a basis for your investment, business, or personal financial decisions. We recommend consulting with your wealth advisor, CPA/tax advisor and/or attorney, as applicable to your situation, prior to implementing any new tax, legal, or investment strategy. Advisory services provided by Destiny Capital Corporation, a Registered Investment Adviser.


Jarrod was born into financial planning and solving financial problems. With his financial advisor father Steve telling stories about finance around the dinner table from an early age, the idea that everyone has a different financial situation was always there. After an early professional career spent in nonprofit and government, Jarrod came back to his roots helping people plan and invest in 2011. Since then, he has worked with individual clients, led internal teams and ultimately became partner and the CEO of Destiny Capital in 2017. With a passion for helping entrepreneurs change the world, Jarrod ultimately oversaw the creation of Entrepreneur Aligned in 2020. With both Destiny Capital and Entrepreneur Aligned, Jarrod leads teams that help people live lives of abundance where money is simply a tool to let everyone be a positive force for the world around them. When he isn’t working with the talented teams for EA and DC you can find him chasing his twins, wily trout or a podium spot at an OCR race.

Jarrod Musick


Posted: 09/29/2023

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