Every business owner should have an exit plan in place. If you
currently own a business, you know as every other successful
entrepreneur knows that you won’t be doing this forever. You
want the value of the business to stay high so you can attract
qualified buyers to take over ownership and expand whenever
you decide it’s time to sell. In order to ensure this happens,
have an exit plan in place so you will be able to sell your
business for the price you desire.
Understanding an Exit Plan
An exit plan is a series of continually evolving and interrelated
plans to help ensure your business will continue to sustain and
When you are first putting together your exit plan, you must answer at least the following
What are your preferred options and timing for exiting the business? For example,
sale to outsider, sale or gift to family or employees, merger with competitor, buyout by a
Taking the Appropriate Measures
- What family members are involved in the business and what are their objectives?
- What are your financial objectives and retirement plans?
- What is the value of your business now?
- What key actions are necessary to increase business value and position it for sale?
- What actions are necessary to manage estate, trust and tax issues you will face through
retirement and beyond?
- What changes in the business and your role are needed now to preserve your quality of
life and your passion for the business?
As a business owner, you need to take your exit plan seriously. It has to be regularly updated
to reflect any change in your life. This includes:
An exit plan should be action oriented with implemented realistic measures. You must take a
long-term approach when putting together an exit plan for your business, continually updating
it and assessing the progress of implementation against the planned time table. Depending on
the complexity of the business, developing a comprehensive exit plan is a demanding task that
generally takes 3 to 6 months to complete and as long as 2 to 4 years to implement. It will
address a wide variety of intricate strategic, operational, financial, tax, human resource and
legal issues. Input should be gathered from key advisors, including your CPA, wealth planner,
estate planner, business consultant, insurance broker, appraisers and mergers and acquisitions
- Finances; and
- The Business.