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Exit/Succession Planning
Business owners often hear that they should have an exit strategy as a part of their Business Plan. However, in my experience, exit strategies are rarely developed and, if they are, the plan is not reviewed regularly to ensure its viability. There are multiple advantages to having an Exit Plan - whether or not the you decide to execute its strategies at the identified time. First, planning a way to effectively exit the company means that you always have your eye on a goal line. Few owners want to exit when the company is performing poorly, thus minimizing or even negating any positive return on their long and hard-earned investment. Most, if not all, envision a time when they can pass on or sell the company and benefit from the proceeds of that transition. Exit Planning is the creation of a comprehensive road map to allow you, the business owner, to successfully exit your business. An exit plan asks and answers all of the business, personal, financial, legal, and tax questions involved in selling a privately owned business. The purpose of an Exit Plan is to maximize the value of the business at the time of the exit, minimize the amount of taxes paid, and ensure that you able to accomplish all of your personal and financial goals as a result. |
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A good exit plan can be complex and usually requires advice from a number of different Specialists.
The failure to create a well-defined exit plan virtually guarantees that the business owner will:
- Exit their companies as a result of pressure from outside circumstances, not as the result of their own desires
- Exit their companies on a timetable that's forced on them instead of one that meets their needs
- Undervalue their companies and leave hard-earned wealth on the table.
- Pay too much in taxes
- Lose control over the process by being reactive and limiting their exit options
- Fail to realize all their business and personal goals
- Suffer unnecessary psychological stress
- Watch a lifetime of work disintegrate as a result of poor business continuity planning
- Lose confidentiality during the sale or exit process
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A well-defined exit plan virtually guarantees that you will:
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A well-designed and implemented exit plan enables you to:
But perhaps most importantly, the number one benefit business owners cite is "peace of mind." A recent survey showed that the number one reason private business sales fail or only partially succeed is a lack of planning on the seller's part (1). Owners who have gone through the exit planning process say they have a new sense of clarity about their options, their stress level is reduced, and they are able to sleep better at night knowing that they have a plan in place to help ensure they meet their personal, business, and financial goals.
- Control how and when to exit
- Maximize the company value in good times and bad
- Minimize, defer, or eliminate capital gains taxes
- Retain control by generating a number of strategic exit options
- Ensure you achieve all your business and personal goals
- Reduce your stress and that of your employees and family
- Ensure continuity of your business, which is your legacy
But perhaps most importantly, the number one benefit business owners cite is "peace of mind." A recent survey showed that the number one reason private business sales fail or only partially succeed is a lack of planning on the seller's part (1). Owners who have gone through the exit planning process say they have a new sense of clarity about their options, their stress level is reduced, and they are able to sleep better at night knowing that they have a plan in place to help ensure they meet their personal, business, and financial goals.
