Build a Successful Exit Plan by Using a Planning Process

As a business owner, planning the exit from ownership of your business is likely to be the single most important decision you will make. When to exit? How much to walk away with? Who to sell it to? What timeline is most suitable? These are just a fraction of the considerations that must be made.

The challenge for many business owners is they don’t want to think about these things until they are absolutely ready to exit. The problem there is you can’t really know when that will be. It could happen unexpectedly due to health issues. For many owners their business is everything to them. They don’t want to think about letting go, so they put it off. Many don’t know what their purpose in life will be without the business, so they put it off. This leads many owners to be unprepared plus the market timing could be unfavorable.

These issues can all be addressed with a proper exit plan. A proper exit plan should be done by applying an organized process with a lot of lead time. Building a solid exit plan takes time. You don’t simple flip a switch. Advisors need to be hired. Data needs to be collected. Analyses need to be performed. Every good plan begins with an exit planning assessment preferably completed by an CEPA. This includes determining your vision, how much you need, whether to sell to a third party or an insider and assembling your advisory team. The second phase is the plan development. This includes data collection, analyses, development of a draft plan, development of a final plan and development of a plan of action (includes timetables and assigning delegated tasks). The final phase is implementation. This includes a formal valuation, managing delegated tasks, making plan adjustments and positioning the company for sale (includes tax considerations).

Then comes the liquidity event and the actual sale of the business. Nothing in this process comes easy. The process is grueling and time consuming. But the better you have prepared and planned, the better your outcomes will most likely be.