Most private business owners have some version of a succession plan. A buy-sell agreement drafted years ago. A vague understanding that the life insurance policy covers it. A handshake with a partner about what happens if one of them walks away.

What most owners don't have is a plan that reflects the business as it exists today.

That gap is where things get expensive.

The Scenario Nobody Talks About Until It's Too Late

Imagine two partners who co-founded a business 12 years ago. Back then, the company was worth $800,000. They set up a buy-sell agreement, funded it with life insurance policies based on that valuation, and moved on to running the company.

Fast forward to today. The business is worth $4.2 million. One partner is 61 and starting to think seriously about an exit. The other has no interest in leaving.

The buy-sell agreement is still in place. The life insurance policies are still active. And the funding gap between what the plan promises and what it would actually cost to execute the transition is now in the millions.

Nobody did anything wrong. The business just grew, and the planning didn't keep pace.

Three Places Succession Plans Break Down

Ownership transition failures rarely come from bad intentions. They come from planning that was solid at the time it was built and never revisited. Here's where the gaps most commonly appear:

The valuation is outdated. A buy-sell agreement tied to a valuation from five or ten years ago may bear no resemblance to what the business is actually worth today. When a triggering event occurs, whether that's retirement, disability, or an unexpected death, the discrepancy between the documented value and the real value creates immediate conflict.

The funding strategy is unclear. Many agreements reference life insurance or a promissory note without specifying how the buyout would actually be structured, timed, or financed. When the moment arrives, the surviving partner or the estate is left solving a liquidity problem under pressure, often with limited options.

The triggering events aren't fully accounted for. Most owners think about death. Fewer think through disability, voluntary exit, divorce, or a partner's bankruptcy, all of which can force an ownership change on a timeline nobody chose. If those scenarios aren't explicitly addressed in the agreement, the default is negotiation under stress.

Why This Matters for Your Advisors, Too

If you're a CPA, attorney, or financial advisor working with private business owners, succession planning gaps are a risk that sits quietly inside your clients' portfolios. The buy-sell may be drafted. The insurance may be in force. But if nobody has pressure-tested the funding mechanics or stress-tested the valuation assumptions recently, your client is exposed in ways they probably don't fully understand.

Bringing clarity to that exposure before a triggering event is one of the most tangible forms of proactive advisory work you can do.

What Getting Ahead of It Actually Looks Like

Business succession planning doesn't require starting over. In most cases, it requires asking a focused set of questions:

• When was the business last formally valued, and does the buy-sell reflect that number?
• How is the buyout funded, and is that funding sufficient given the current valuation?
• What happens in each triggering scenario, retirement, death, disability, voluntary exit, and is the agreement specific enough to hold up under each one?
• Are all parties aligned on the answers to those questions?

These aren't complicated questions. But they don't get asked often enough, and when they surface mid-transition, the options narrow fast.

We're Brining This Conversation to Schaumburg on February 26th

DSP Insurance Services and MassMutual are hosting a focused 90-minute executive briefing on business succession and buy-sell planning, designed for private business owners, partners, shareholders, and the advisors who work alongside them.

Kathryn Wakefield, MassMutual, will walk through how ownership transitions are structured, how funding approaches work in practice, where planning commonly breaks down, and what questions owners should be asking right now, before a transition is in motion.

Two sessions available:

Morning: 7:30 to 9:00 a.m. (doors open at 7:00) | Breakfast buffet included

Midday: 12:00 to 1:30 p.m. (doors open at 11:30) | Plated lunch included

Location: Maggiano's Little Italy, Schaumburg

Seats are limited. If you're a business owner who hasn't revisited your succession plan recently, or an advisor who wants to bring a client into this conversation, this is a practical, no-pressure session worth your 90 minutes.

Reserve Your Seat