Handing Over the Company

A handover is four capabilities changing hands: access to the cash, access to the customers, authority to decide, and the record of how the business works. Documents cover the fourth. The first three need practice, and practice is the part families skip because it feels like not working.

The finish line is not when you feel ready. It is when a stranger can run the company for two weeks without you. That test is uncomfortable on purpose, and it also gives you a date, which a feeling does not.

Sourced. The three documents named on this page belong to the SBA and the IRS: Form 148 for the personal guarantee, Form 413 for the personal financial statement a lender will ask the next owner for, and Form 56 for notifying the IRS of a fiduciary relationship.

Ours. The stranger test, the four capabilities, and the twelve-month sequence are Eagle Rock standards. No government body has an opinion on how long a handover should take, and we are not claiming one does. The $50,000 purchase order is an illustration of the size of order that actually gets signed off without calling the owner, not a published threshold.

What we did not find. We looked for a published benchmark on family-business handover timelines and there is not one we can point to that would survive being checked. So we give you our standard, and we label it as ours.

Pick someone who has never worked in the business: a general manager, a controller, a family member with no operational role, or a hired operator. Give them two weeks. In that fortnight they should run payroll, approve a purchase of the size that actually gets signed off without calling you, such as a $50,000 order, handle a customer who wants a refund, and pull a monthly financial pack without asking you to explain it.

If any of those four needs you, you have not handed over. You have made yourself unavailable and called it a transition. That version of succession ends in a crisis, because the decision-making was never distributed, it was only deferred. And it is not visible from the inside, which is why owners usually find out during the first month away.

The lender. If you signed an unlimited personal guaranty for the company's debt, and SBA Form 148 is the guarantee SBA lenders use for owners holding 20 percent or more (SBA Form 148, last updated September 21, 2020), then your signature does not disappear because ownership changes. Get the lender's answer in writing, in advance, and ask what the release requires. Sometimes the answer is that the guarantee stays and the company has to refinance.

The next borrower's credit. A bank or a buyer will want the personal financial statement of whoever is now the borrower. SBA Form 413 is the Personal Financial Statement SBA uses to assess an applicant's repayment ability and creditworthiness for 7(a) and 504 loans (SBA, Form 413, last updated February 13, 2025). The point is that the next owner has to qualify on their own. If they cannot, the transition stalls on their credit instead of on your readiness, and you find out late.

Your tax authority. If you die, somebody has to tell the IRS who is in charge of the company. IRS Form 56, Notice Concerning Fiduciary Relationship, is how a fiduciary notifies the agency of the creation or termination of a fiduciary relationship under section 6903 and gives notice of qualification under section 6036 (IRS, Form 56, page last reviewed October 7, 2026). Bank accounts, the payroll system, and the customer contracts need the same treatment: a named person with authority, written into the operating agreement rather than assumed by everyone.

And the risk you are pricing. If nobody else can run the company, the exposure is not theoretical. Key person risk is the risk that one person's knowledge, relationships, or judgement is load-bearing for the revenue, and lenders and buyers price it long before you feel it. See key person risk for how to size it.

First 90 days: write it down. Every recurring obligation with an amount and a date, meaning payroll, taxes, insurance, loan payments, leases, subscriptions, and the payment terms your customers get. Every top-10 decision with the rule you use. Every customer with the name of the person who owns the relationship. This is the stage most owners skip, and it is the stage the next owner will need most.

Days 90 to 180: delegate authority, not tasks. Move a decision with real money behind it. Start with the ones you enjoy and work into the ones you are afraid of. Keep a log of everything that comes back to you. The log is the handover plan, because it shows you exactly where you still hold the business.

Days 180 to 365: get out of the room. Take a holiday and do not take calls. When something goes wrong, let the next owner fix it. This is the step most owners cannot take, and it is the one that decides whether the company survives you in any meaningful sense.

Decide one more thing in year one: what you are paid during the transition and for how long. A defined period of owner pay at a defined amount, ending on a date, is a clean answer. An open-ended arrangement is how the next owner never really takes over.

Six jobs. The log is the one that makes the other five work.

SBA Form 148 — Unconditional Guarantee is the source of the unlimited personal guaranty that survives a change of ownership. Page last updated September 21, 2020.

SBA Form 413 — Personal Financial Statement is the source of SBA's use of the form to assess the repayment ability and creditworthiness of applicants for 7(a) and 504 loans, which is why the next owner has to qualify on their own credit. Page last updated February 13, 2025.

IRS Form 56 — Notice Concerning Fiduciary Relationship is how a fiduciary notifies the IRS of the creation or termination of a fiduciary relationship under section 6903 and gives notice of qualification under section 6036. Last reviewed October 7, 2026.

What is ours rather than published. The stranger test, the four capabilities, and the twelve-month sequence are Eagle Rock operating standards. There is no published benchmark behind them, and we did not find one we could defend.