For Professional Advisors

When a Client’s Net Worth Is Trapped in the Business: A Financial Planner’s Playbook

TL;DR: For most business-owner clients, the business is the portfolio. Exit Planning Institute research consistently finds roughly 80 percent of the average owner’s net worth is tied up in the company, and 70 percent of owners say business income is essential to their lifestyle. Yet EPI’s 2026 data shows only 27 percent of Baby Boomer owners have ever completed a formal valuation. That means most financial plans for owners are built around an unpriced, illiquid, concentrated position. The fix is not selling the client on an exit. It is getting the asset valued, de-risked, and onto a real timeline, with the planner keeping the relationship and the lead role.

Financial planners live by diversification. Then a business owner sits down, and the ordinary rules get suspended for the biggest asset on the balance sheet. Would you build a plan around a single stock position you had never priced? In fifteen years of working alongside planners, CPAs, and attorneys across the Gulf South, I have seen the same picture over and over: a carefully managed investment portfolio next to a business worth several times more that nobody has valued, stress-tested, or scheduled for liquidity.

Key Takeaways

EPI research consistently finds roughly 80 percent of the typical owner’s net worth is concentrated in the business, and 70 percent of owners say its income is essential to their lifestyle.

Only 27 percent of Baby Boomer owners have completed a formal valuation, and just 9 percent have an estate plan, per EPI’s 2025 Generational State of Owner Readiness report.

Only 20 to 30 percent of businesses that go to market actually sell, so the concentrated position is also a conditional one.

The planner’s opening move is a valuation, not a sale: you cannot allocate, insure, or plan an estate around an unpriced asset.

Why is business-owner net worth a planning problem?

Because concentration this extreme breaks the assumptions the rest of the plan relies on. EPI’s owner-readiness research puts roughly 80 percent of the average owner’s net worth inside the business. The position is illiquid, undiversified, unhedged, and priced by folklore: what a competitor supposedly sold for, what an online calculator said, what the owner needs it to be worth.

The liquidity assumption underneath it is shakier than most clients know. The Exit Planning Institute reports only 20 to 30 percent of businesses that go to market actually sell. So the plan’s largest asset is not just unpriced; its conversion to cash is genuinely uncertain, and the owner’s retirement date is effectively a bet on a transaction that fails more often than it succeeds. In 2026 that bet is getting more crowded, with EPI reporting 51 percent of the American business market owned by Baby Boomers set to transition within ten years, all heading toward the same buyer pool.

Citation capsule: Exit Planning Institute research finds roughly 80 percent of the average business owner’s net worth is held inside the business, while only 20 to 30 percent of businesses that go to market actually sell. For financial planners, that combination means the largest asset in most owner-client plans is both unpriced and conditionally liquid, and it deserves the same rigor as any concentrated position.

How big is the readiness gap among your clients?

Wider than almost any client will volunteer. In 2026, EPI’s Generational State of Owner Readiness report found that among Baby Boomer owners, more than half of whom plan to exit within five years, only 27 percent have completed a formal valuation, only 9 percent have an estate plan, and only 5 percent have assembled an exit planning team. Meanwhile EPI’s national research found 70 percent of owners say business income is essential to maintaining their lifestyle.

Put those together and the typical owner-client is five years from needing the largest liquidity event of their life, dependent on the asset’s income in the meantime, and operating without a price, a plan, or a team. The planner who names this gap first is doing the client an enormous service, and the signals are usually visible from your seat before anyone else’s. We covered the tells in spotting an exit-ready client.

Why is a valuation the first move, not a sale conversation?

Because every planning discipline downstream depends on the number. Retirement modeling needs it. Estate planning needs it, especially with 9 percent of Boomer owners holding an estate plan against a $124 trillion wealth transfer Cerulli projects through 2048. Insurance coverage, buy-sell agreements, and gifting strategies all need it. An owner-client with an unvalued business is a plan with its cornerstone missing.

The engagement should match the purpose, and this is worth knowing before you refer: for planning purposes, a limited-scope calculation of value is often sufficient and considerably less expensive, while litigation, lending, and tax filings require a full conclusion of value. The distinction is explained in calculation of value versus conclusion of value. A credentialed valuation also does something softer but just as useful: it converts the owner’s folklore number into a documented one, which reframes every subsequent conversation you have about retirement dates, savings rates, and risk.

Our finding: In our co-advisory engagements, the valuation almost never matches the owner’s mental number, and the direction of the miss is unpredictable. Roughly as many owners undervalue their business as overvalue it. Either way, the planner ends up planning with a real number for the first time, and the client’s decisions change within the quarter.

The three-year plan that needed to happen now

A story from our practice, details changed to protect confidentiality. A financial planner referred us a client, a doctor who owned her practice, with a clear brief: she wanted to sell the business in three years. We started the way we always do, with a valuation and a business assessment from a buyer’s perspective. Nobody was talking about going to market.

Discovery changed the picture. Her right hand, the key person who ran the day-to-day alongside her, was going to have to retire for medical reasons within the next year. There was no replacement. Once that person left, the doctor was going to be in a bind, and more importantly, the business was going to be much harder to sell. Discovery surfaced something else, too. She did not necessarily want to retire in three years. She was tired of running the business day to day. What she wanted was to scale back, have more time, and stop being the person the whole practice depended on.

Based on our experience, we made the decision to bring the business to market right away. That solved the key-employee replacement problem before it became a buyer’s objection, and it solved the doctor’s real problem three years sooner than she expected. We brought three offers. Under the new group, her compensation actually exceeded what she had been taking home running the practice herself. She was ecstatic.

These are the conversations that catch big problems before they show up down the road, and they bring real value to the client and to the referral partner in equal measure. Her advisor eventually left that financial planning firm. Because of the work we had done together, the firm retained the client anyway, on the strength of its exit planning program. The referral did not cost the planner’s firm a client. It anchored the client to the firm.

What does the planner’s playbook look like?

Four moves, all of which keep you in the lead chair:

Surface the concentration. Put the business on the balance sheet review explicitly, at “value unknown” if that is the truth. Clients respond to seeing their own concentration stated plainly.
Commission the valuation. A planning-scope calculation of value prices the position. You gain a defensible input; the client gains a baseline and a gap analysis.
Put the de-risking on a timeline. Value gaps like owner dependence and customer concentration take two to three years to fix. That timeline belongs inside your plan, alongside the estate planning triggers and any buy-sell funding review.
Bring in the M&A co-advisor when the timeline says so. Our model is a co-advisor introduction: you keep the client relationship and the planning lead; we handle valuation and, eventually, the transaction. The handoff points are covered in when to refer a client to an M&A advisor.

Business Owner Net Worth Concentration FAQ

How much of a business owner’s net worth is typically in the business?

Exit Planning Institute research consistently finds roughly 80 percent of the average owner’s net worth is tied up in the business. Combined with EPI’s finding that 70 percent of owners depend on business income for their lifestyle, the company is usually both the client’s largest asset and their primary income source.

Should a financial planner treat a client’s business like a concentrated stock position?

Yes, with one adjustment: it is a concentrated position the client can actively improve. Like a single-stock position, it is illiquid, undiversified, and unpriced until examined. Unlike one, its value responds to management action, which is why valuation plus a de-risking timeline beats either ignoring it or forcing a premature sale.

What kind of valuation does a planning client actually need?

For retirement and estate planning inputs, a limited-scope calculation of value is usually sufficient and less expensive. A full conclusion of value becomes necessary for litigation, SBA lending, gift and estate tax filings, and disputes. Matching the engagement to the purpose protects the client from paying twice.

When should a planner bring in an M&A advisor?

When the client’s exit sits inside a five-year window, when a valuation is needed, or when triggers appear: unsolicited buyer approaches, health events, partner friction, or a stalled succession. In a co-advisor model the planner keeps the client relationship and the planning lead while the M&A advisor handles valuation and transaction work.

Does referring a client to an M&A advisor risk losing the relationship?

Not in a co-advisor structure, and the sale usually deepens the relationship. The transaction converts a concentrated, illiquid position into investable assets under the planner’s management, and the client associates the planner with the best financial outcome of their life. We work alongside the existing advisory team, never around it.

Conclusion: price the position, then plan around it

No planner would model retirement around an unpriced stock position worth eighty percent of the client’s net worth. The business deserves the same discipline: a real valuation, a de-risking timeline, and a liquidity plan that respects how often sales fail. The planner who leads that conversation becomes the most valuable advisor the client has.

If you have a client whose plan is carrying the business at a guess, we do this alongside planners every month, on a co-advisor basis where the relationship stays yours. Book a conversation and we will talk through the situation before anyone talks to the client.

Joel F. Duran has 15+ years of M&A and business brokerage experience and holds the CM&AA, M&AMI, CM&AP, CEPA, CVGA, CVB, CAIM, and CMSBB designations. Duran Advisors serves upper Main Street and lower middle market businesses across the Gulf South, including New Orleans Metro, the North Shore, Baton Rouge, Houma-Thibodaux, and South Mississippi. The client story in this article is a composite drawn from real engagements, with details changed to protect confidentiality. This article is general information, not investment, legal, or tax advice.

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Sources

Exit Planning Institute, State of Owner Readiness research: roughly 80 percent of average owner net worth held in the business; 20 to 30 percent of businesses that go to market actually sell; 51 percent of the American business market owned by Baby Boomers transitioning within ten years.
Exit Planning Institute, 2025 Generational State of Owner Readiness: 27 percent of Baby Boomer owners with a completed formal valuation; 9 percent with an estate plan; 5 percent with an exit planning team.
Exit Planning Institute, 2023 National State of Owner Readiness: 70 percent of owners report business income essential to lifestyle.
Cerulli Associates, “Cerulli Anticipates $124 Trillion in Wealth Will Transfer Through 2048” (December 2024).