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Exit plans are necessary to secure a business owner’s financial future, but many don’t think to establish one until they’re ready to leave.

 Two coworkers looking at tablet as they walk through an office hall.

An exit strategy is an important consideration for business owners, but it’s often overlooked until significant changes are necessary. Without planning an exit strategy that informs business direction, entrepreneurs risk limiting their future options. To ensure the best for your business, plan your exit strategy before it’s time to leave.

What is an exit strategy?

An exit strategy is often thought of as the way to end a business — which it can be — but in best practice, it’s a plan that moves a business toward long-term goals and allows a smooth transition to a new phase, whether that involves re-imagining business direction or leadership, keeping financially sustainable or pivoting for challenges.

A fully formed exit strategy takes all business stakeholders, finances and operations into account and details all actions necessary to sell or close. Exit strategies vary by business type and size, but strong plans recognize the true value of a business and provide a foundation for future goals and new direction.

If a business is doing well, an exit strategy should maximize profits; and if it is struggling, an exit strategy should minimize losses. Having a good exit strategy in practice will ensure business value is not undermined, providing more opportunities to optimize business outcomes.

[Read more: What Is a Business Valuation and How Do You Calculate It? ]

Benefits of an exit strategy

Planning a complete exit strategy well before its execution does more than prepare for unexpected circumstances; it builds purposeful business practices and focuses on goals.

Even though a plan may not be used for years or decades, developing one benefits business owners in the following ways:

  • Making business decisions with direction . With the next stage of your business in mind, you will be more likely to set goals with strategic decisions that make progress toward your anticipated business outcomes.
  • Remaining committed to the value of your business . Developing an exit strategy requires an in-depth analysis of finances. This gives a measurable value to inform the best selling situation for your business.
  • Making your business more attractive to buyers . Potential buyers will place value in businesses with planned exit strategies because it demonstrates a commitment to business vision and goals.
  • Guaranteeing a smooth transition . Exit strategies detail all roles within a business and how responsibilities contribute to operations. With every employee and stakeholder well-informed, transitions will be clear and expected.
  • Seeing through business — and personal — goals after exit . Executing an exit strategy that’s right for your business’s value and potential can prevent unwanted consequences of exit, like bankruptcy.

Because leaving your business can be emotional and overwhelming, planning a proper exit strategy requires diligence in time and care.

Weighing your options: closing vs. selling

There are two strategies to consider for your exit plan.

Sell to a new owner

Selling your business to a trusted buyer, such as a current employee or family member, is an easy way to transition out of the day-to-day operations of your business. Ideally, the buyer will already share your passion and continue your legacy.

In a typical seller financing agreement, the seller will allow the buyer to pay for the business over time. This is a win-win for both parties, because:

  • The seller will continue to make money while the buyer can start running the show without a huge upfront investment;
  • The seller may also remain involved as a mentor to the buyer, to guide the overall business direction; and
  • The transition for your employees and customers will be a smooth one since the buyer likely already has a stake in the business.

However, there are downsides to selling your business to someone you know. Your relationship with the buyer may tempt you to compromise on value and sell the business for less than what it’s worth. Passing the business to a relative can also potentially cause familial tensions that spill into the workplace.

Instead, you may choose to target a larger company to acquire your business. This approach often means making more money, especially when there is a strong strategic fit between you and your target.

The challenge with this option is the merging of two cultures and systems, which often causes imbalance and the potential that some or many of your current employees may be laid off in the transition.

[Read more: 5 Things to Know When Selling Your Small Business ]

Liquidate and close the business

It’s hard to shut down the business you worked so hard to build, but it may be the best option to repay investors and still make money.

Liquidating your business over time, also known as a “lifestyle business,” works by paying yourself until your business funds run dry and then closing up shop.

The benefit of this method is that you will still get a paycheck to maintain your lifestyle. However, you will probably upset your investors (and employees). This method also stunts your business’s growth, making it less valuable on the market should you change your mind and decide to sell.

The second option is to close up shop and sell assets as quickly as possible. While this method is simple and can happen very quickly, the money you make only comes from the assets you are able to sell. These may include real estate, inventory and equipment. Additionally, if you have any creditors, the money you generate must pay them before you can pay yourself.

Whichever way you decide to liquidate, before closing your business for good, these important steps must be taken:

  • File your business dissolution documents.
  • Cancel all business expenses that you no longer need, like registrations, licenses and your business name.
  • Make sure your employee payment during closing is in compliance with federal and state labor laws.
  • File final taxes for your business and keep tax records for the legally advised amount of time, typically three to seven years.

Steps to developing your exit plan

To plan an exit strategy that provides maximum value for your business, consider the six following steps:

  • Prepare your finances . The first step to developing an exit plan is to prepare an accurate account of your finances, both personally and professionally. Having a sound understanding of expenses, assets and business performance will help you seek out and negotiate for an offer that’s aligned with your business’s real value.
  • Consider your options . Once you have a complete picture of your finances, consider several different exit strategies to determine your best option. What you choose depends on how you envision your life after your exit — and how your business fits into it (or doesn’t). If you have trouble making a decision, it may be helpful to speak with your business lawyer or a financial professional.
  • Speak with your investors . Approach your investors and stakeholders to share your intent to exit the business. Create a strategy that advises the investors on how they will be repaid. A detailed understanding of your finances will be useful for this, since investors will look for evidence to support your plans.
  • Choose new leadership . Once you’ve decided to exit your business, start transferring some of your responsibilities to new leadership while you finalize your plans. If you already have documented operations in practice in your business strategy, transitioning new responsibilities to others will be less challenging.
  • Tell your employees . When your succession plans are in place, share the news with your employees and be prepared to answer their questions. Be empathetic and transparent.
  • Inform your customers . Finally, tell your clients and customers. If your business will continue with a new owner, introduce them to your clients. If you are closing your business for good, give your customers alternative options.

The best exit strategy for your business is the one that best fits your goals and expectations. If you want your legacy to continue after you leave, selling it to an employee, customer or family member is your best bet. Alternatively, if your goal is to exit quickly while receiving the best purchase price, targeting an acquisition or liquidating the company are the optimal routes to consider.

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Exit Strategies - All You Need to Know about Business Exit Planning

business exit planning software

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

business exit planning software

The question, “What is your exit plan?” tends to draw blank expressions when asked to business owners.

A survey of business owners conducted by the Exit Planning Institute shows that a startling 2 out of 10 businesses that are listed for sale eventually close a transaction, and of these, around a half end up closing only after significant concessions have been made by the seller.

Business owners need to think about exit planning before searching for potential buyers. The tools provided by DealRoom can be a valuable asset to any business owner looking to develop an exit strategy.

By working with a team of professional advisors, accountants, lawyers, and brokers, you can ensure the right documents are in place for a business exit whenever the time comes.

In this article, we talk about creating a business exit plan and how to make one for your business.

What is a Business Exit Strategy?

A business exit strategy outlines the steps that a business owner needs to take to generate maximum value from selling their company. A well-designed business exit strategy should be flexible enough to allow for unforeseen contingencies and account for the fact that business owners don’t always decide on their own terms when to exit. By creating a strategy in advance, owners can ensure that they can at least maximize value in the event of an unplanned exit from the business.

What is a Business Exit Strategy?

Investor exit strategy

An investor exit strategy is similar to that of a business exit strategy. However, investors look for a financial return on their exit from a company, so bequeathing is never one of the options considered. An investor will often have a list of potential acquirers in mind, as well as a timeframe, as soon as their investment is made. In this type of scenario, there is often an exit multiple in mind (i.e. a multiple of EBITDA or a multiple of the original investment made in the business).

Venture capital exit strategy

Another business exit strategy option is a venture capital exit strategy. As our article on venture capital outlines, if a company is venture funded then consider that your investor will have a pre-planned exit. As an early stage company, this is a natural part of taking investments. Usually, with a VC investment, the aim is for an exit after five years, either through an industry sale or an IPO, where they can liquidate their original equity investment.

Motives for Developing Exit Strategies

Technically, it is important for equity owners to have a broad outline of what an exit would look like. For example, the image below represents various motives ranging from financial gain to mitigating environmental risk.

Common Motives for Developing Exit Strategies

Some of the common motives for business exit include the following:

Retirement - Arguably the most common reason of all motives is retirement. Business owners will inevitably retire at some stage, and it’s best that they have an exit strategy in place before doing so.

Investment return - A business exit strategy as part of a wider investment strategy - for example, the VC company planning to go to IPO after five years - makes the exit valuation part a component of the initial investment in the business.

Loss limit -A business exit is ultimately a kind of real option for a business. If the business is hemorrhaging money, the best option may be to exit immediately - ‘cutting your losses’ on the business, a sit was.

Force majeure - Like the examples of Covid-19 and Russia’s invasion of Ukraine, sometimes an investor or owner doesn’t really have a choice: The circumstances dictate that they have to exit.

Types of Exit Strategies

Types of Exit Strategies

Sale to a strategic buyer

Strategic buyers are usually in the same industry as the company whose owner is looking to exit. And in other cases, the buyer can be in an adjacent market looking to compliment their products in an existing market, or expansion of their products into a market.

Sale to a financial buyer

Financial buyers are solely looking for a financial return from their investment in a business and the exit is the primary means of achieving this return. Examples include venture capital and private equity investors.

Initial Public Offering (IPO)

This form of exit, far more common with startups than mature companies, enables company owners to exit by selling their equity to investors in public equity markets.

Management buyout (MBO)

An exit through MBO would occur when the owner sells the company to its current management team, whose familiarity with the business technically should make them the best candidates to achieve value from an acquisition.

Leveraged buyout (LBO)

A leveraged buyout occurs when a buyer takes a loan or debt to purchase another company. The buyer also uses a combination of their assets and the acquired company's assets as collateral. Financial models can be used for multiple scenarios and simulations of when an LBO is an effective choice.

Liquidation

Liquidation can be used by a business owner to exit if they feel like the liquidation would yield cash faster or that the individual assets (i.e. property, plant, and equipment) of the business were more liquid than the business as a going entity.

Exit Strategy for Startups

Startups looking for VC investment can include an exit strategy as part of their initial pitch. It is not mandatory. Sometimes this can work when well, for example, when a startup founder is well versed in the industry and has a credible 5-year forecast.

Startup exit strategies depend on a few different factors:

Market timing

How have IPOs for startups performed in the past 12-18 months? If public markets are showing enthusiasm for companies like the one being pitched, it makes it easier to show how an exit can occur.

Comparable transactions

Similar to IPOs, companies can use comparable transactions (industry or private equity sales) to show investors their route to an exit. The comparable firms should be operating in the same or close to the same competitive space.

How to Put Together a Business Exit Plan

Remember that the purpose of the plan is to make the new business owner transition as straightforward as possible.

Although the steps which follow are general, nobody knows a business better than its owner, so take whatever steps are necessary to make your business as marketable to potential buyers as possible.

These steps also assume that you, the owner of a business, have weighed up the options elsewhere. Personal finances, family situations, and other career options are beyond the scope of this article.

Rather, the intention of the points below is to ensure that a business will be ready to sell in the fastest possible time at a fair price.

Business exit plan

  • Know the business
  • Ensure that finances are in order
  • Pay off creditors
  • Remove yourself from the business
  • Create a set of standard operating procedures
  • Establish (and train) the management team
  • Draw up a list of potential buyers

1. Know the business

This sounds obvious but a business can lose focus quickly in the aim of diversification, to the extent that it becomes ‘everything to every man.’

This may be useful in the short-term for revenue streams, but just be sure that your business has focus. It will help you find the right buyers when the time comes and to be able to communicate which part of the market your business occupies.

2. Ensure that finances are in order

This should be a priority regardless of any future business plans.

But if you intend to sell your business at short notice, it's best to have a clean, well-maintained set of financial statements going back at least three years.

3. Pay off creditors

The less debt that a business holds on its balance sheet, the more attractive it will be to potential buyers.

A common theme among small business owners in the US is thousands of dollars of credit card debt. This can be a red flag to many buyers and should be paid off as soon as possible.

4. Remove yourself from the business

How important are you to the day-to-day operations? If your business would lose more than 10% of its revenue were you to leave, the answer is “too important.”

If revenues are tied to the owner, buyers are not going to want to buy the business if the owner is going to leave right after.

Although it can be a challenge, seek to minimize your direct impact on the business, in turn making it more marketable.

5. Create a set of standard operating procedures

Closely related to the above point, ensure that your business has a set of standard operating procedures (SOPs), ideally in written form, that would allow any owner to maintain the business in working order merely by following a set of instructions.

6. Establish (and train) the management team

Are the existing managers capable of taking over the business and running it as is? If you leave the business for a vacation and one of your managers calls you several times, the answer to this question may be ‘no’.

They may need more training, or you may need a different set of managers. In either case, having a capable team in place will be valuable whether you decide to exit your business or not.

7. Draw up a list of potential buyers

A list of buyers should be made and refreshed on a reasonably regular basis. Ideally, you would know their criteria for buying a business, but this is not always practical.

Keeping a long list of buyers means that you can reach out to them at short notice if it is  required at some point in the future.

This list is likely to include at least some of your managers or suppliers.

Importance of Exit Strategy

Many owners make the mistake of thinking that a business exit plan means the same thing as a ‘retirement plan’, believing that they can start thinking about putting one together as soon as they hit 55 years of age.

This is an error. Not because your departure is impending, but because it doesn’t give you the flexibility.

Instead of looking at a business exit plan as a retirement plan, rethink it as a divestment option.

An alternative way of thinking about this is, what happens to the business owner that doesn’t have an exit strategy? Think of the value destruction that occurs to the business if something unexpected happens and the owner has to make an unplanned sale, at a discount, in unattractive market circumstances, or even at a time of personal loss.

Instead of thinking about the business exit as something that will happen in the future, rethink it as something that could happen at any moment.

Exercising critical thinking to write a business exit strategy can be exciting as well as enlightening. Thinking of an exit as an end state is not the best approach since this limits businesses to a strict definition. Rather, consider how the process can be supportive of a business' growth strategy. Take these top three considerations:

  • Financial considerations: If the exit strategy has a target revenue number in 5 years then how will the business get there? What financial dashboards are needed to properly run the company? How will expenses be managed so a business does not outspend against earnings?
  • Supply chain considerations: What products will need to be in your catalog to maximize margins? What inventory turns ratio are you aiming for on a monthly basis?
  • People considerations: Who do I hire to grow the company exponentially? What benefits do I offer to attract the best talent but don't cause complications at the exit? How do I write the force majeure so I protect the company and employees?

A business's primary goal is long-term value generation to its customers, itself, and its stakeholders. Having a thoughtful exit strategy shows the maturity of a business's Leadership towards longevity and value creation. There are many facets of the journey from owner motivation to financial strategies.

At DealRoom we help the owners of businesses of all sizes prepare for this eventuality. Our Professional Services team is ready to help businesses think through these details. It is important that an exit strategy be a journey throughout the growth stages.

Talk to us about how our tools can be an asset for you in your exit plan.

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Manage the exit planning process.

Business owners want and need advisors who can create and execute a strategy that allows them to leave their businesses on their terms: when they want, for the money they need, and to whomever they choose. BEI is the only Exit Planning organization that provides comprehensive plan design and support to advisors, along with personalized help through its highly skilled staff.

Our planning process, combined with our proprietary assessments and discovery tools, help you identify planning solutions; collaborate with other advisors; and develop a customized, executable road map to guide your clients toward their post-ownership goals. Implementing this systematic process into your practice saves you time, and gives you the tools and resources you need to accomplish your clients' goals at the right time, in the right context, and with the right people.

Whether you want to manage the Exit Plan creation process yourself or outsource a portion to a consultant, BEI can help.

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Why Every Business Owner Needs an Exit Strategy

Table of contents.

Mark Fairlie

You wrote a business plan to launch your company. To say goodbye to it, you need an exit plan to get the maximum possible return and to limit any future exposure to what happens to the company after your departure. But years of experience teach you that nothing in business is predictable — and that’s why you need two exit plans.

Why every business owner needs an exit strategy

Today, most business brokers and advisors recommend incorporating a thorough exit strategy into your business planning from the very start. While it may seem counterintuitive to plan on starting or buying a business and simultaneously plan how you’re going to sell or remove yourself from it, this is the smartest move you can make in today’s fast-paced economy.

Here are some of the benefits of developing an exit strategy.

Gives you an end goal 

If you don’t know where you’re going, you’ll never know when you get there. An exit strategy helps define what success is for you and provides you with a timetable complete with milestones toward your exit.

Informs strategic decision-making  

Without a plan, it’s easy to get caught up working “for” the business, and resolving day-to-day issues. With a firm end game in mind, you have the vision to work “on” the business instead, planning and executing the strategies you need to achieve the ultimate end goal you’ve set for yourself.

Enhances the value of the business

If you don’t have an exit plan, your business will have some inherent value when you look to change ownership, but this is often the baseline value. With an exit strategy where you have a clear end goal in mind, your business is worth more to potential buyers or investors. You’ve grown it, locked its profitability, trained a strong management team, established a customer base, cemented meaningful supplier relationships and, most importantly, structured the business to operate independently of your personal involvement. That is valuable.

Provides a flexible template 

At some point, you will likely need to make adjustments to your exit strategy. Sometimes, that will be for business reasons. Other times, something unexpected and unwanted like a sudden death, divorce, major health problem or required relocation may force you to change course. It’s easier to revise and tweak a plan that already exists with clear objectives and milestones than to come up with one suddenly to cope with a sudden change.

Having a preexisting strategy makes managing unforeseen events simpler. That’s because you already have a way of making decisions for growth — one that’s got you to where you are. You can strengthen this by involving outside professional advisors like a business broker, attorney and accountant to help you course correct when necessary and to monitor progress against your goals. 

Why you need 2 exit strategies

Creating one exit strategy may seem daunting enough, but to cover your bases, you should craft two different plans: one for a voluntary exit and one for an involuntary exit.

With a voluntary exit strategy, you’ll know the following:

  • When you want to leave:  Maybe it’s in five years, 10 years or when revenue hits $10 million.
  • Who you want to take over the business:  It could be a brand-new owner, your current management or a family member.
  • How much money you want to leave with:  Perhaps you’d like a lump-sum payment, a share of profits every month for the rest of your life or a mixture of both.
  • What to do if you’re approached by a potential buyer:  How will you react if you’re contacted out of the blue? More business owners today are receiving unsolicited buyout offers than in years past.

But things don’t always go the way you expect them to, so you need a plan for that as well. With an involuntary exit strategy, you’ll know what to do in the following situations:

  • You fall ill and you’re not able to work in the way you used to (or at all):  You need to know who’ll take the reins and make decisions and you need to train them now so the business is ready.
  • Your business begins to fail financially:  You need to know which employees and assets you can jettison so you can stay solvent and in business.
  • You burn out and just can’t take it anymore:  If it’s all getting to be too much, you need to look after yourself. Do you hang in there, appoint a successor for day-to-day overall management or look to sell up? A well-defined involuntary exit strategy can lead the way.

The best way to plan for leaving your business for good is to prepare as if you have to leave it involuntarily.  That might sound strange, but the situations that lead to voluntary and involuntary exits have a lot in common. For example, in either scenario, you need to do the following:

  • Train people to run the company in your absence:  If you want to sell up, the person who wants to buy it probably won’t want to run the company day to day. If they know your business is not owner-reliant, this is a massive selling point. Meanwhile, if you fall ill or burn out, it’s a big comfort knowing your staff can keep the business operational so it can continue flourishing.
  • Know which assets and staff to cut to survive:  This is not only a way for you to reduce costs when business is suffering. It’s also a road map for a new owner looking to streamline operations and make more money from their investment.
  • Sell off nonvital assets quickly for cash:  A new owner will want to know they can sell certain assets to offset some of the amount they paid you to take over the business. If you’re managing a crisis and need cash, you need to know which assets you can sell (or refinance) to bring money into your account.

With two exit plans in place, you have more bases covered, and you can carry out strategies that benefit both you and the new ownership.

Don’t think of an exit strategy as something for the short term. It might take five or 10 years for a successful exit strategy to reach its end. This is all about being ready to leave your business on your terms whenever the time comes.

What an exit strategy involves

Developing a well-rounded exit strategy entails the following.

Knowing when you want to leave

For your voluntary exit strategy, set yourself a date in the future by which you want to achieve your ultimate goals. These milestones could be based on metrics like company revenue and profitability. Decide on whether you’ll still proceed with a sale if you’re not successful in hitting those targets.

When you have a fixed date of departure in mind, your approach to running the business changes. You now think long-term as well as short-term because you’ll constantly be looking for ways to not only improve profitability but also build more value in your business to make it as attractive as possible to potential buyers.

Discovering who your most likely buyers are

Try to come up with “buyer personas” — documents that detail the type of person or company that would want to buy your business and why. (These are similar to customer personas , which are developed to identify your ideal customer.) To get your wheels turning, look below at potential buyers for four very different types of businesses.

Think about what specific aspects of your business will be valuable to buyers. Consider how you’ll develop and showcase those assets to increase the appeal and value of your company at the point of exit.

Developing assets that are valuable to other businesses

Sometimes, your company’s real value may be hidden behind your North American Industry Classification System (NAICS) Code. Don’t limit your company’s selloff potential by only considering buyers in your specific field.

Consider this example: You’re an e-commerce retailer and you’ve developed custom software that places your products in prominent search positions on third-party sales platforms. That, of course, would have great value for a purchaser from your sector. But it may have much greater value to a technology company and you could make a lot more money selling or licensing that software than doing a traditional sale to a competitor. Another benefit is that you could sell or license this software to raise cash if your company falls on hard times and needs money quickly. 

Improving performance in your business

Keep finding areas of improvement across your business. If you have developed custom software, as mentioned above, continue to develop it with your own needs in mind first but also consider what other companies would need to make them want to rent from you.

Look at new ways to get more people to your website or your premises every month with each visit costing you less. For instance, consider changing suppliers if you’re offered a similar quality product or service that does the job for a lower price. Ask yourself what you need to do to get that package to your customer in three days instead of four.

Another great way to build value is to do a competitor analysis. Investigate the competition in your market. Where are they doing better than you and how can you match or beat them?

Chasing profitable growth

Be experimental and creative in your advertising and keep tweaking every campaign to find wins like a drop in cost per sale or conversion. If you can prove to a potential buyer that by spending $1 on this campaign, you get $10 in revenue back and that’s been the case for years, that has tremendous value.

Promote deals to customers through  email marketing campaigns  and  short message service messaging and aim to make as much money as you can on each sale. Think of your future buyer when pricing up and chasing new business.

Doing everything you can to keep customers loyal

Don’t use the client email addresses and phone numbers you’ve collected just to move inventory; use them to  grow customer loyalty . 

Let customers know about a new product before it goes live on your website and give them the first opportunity to buy it. Send emails asking repeat clients to recommend you in online reviews. When someone does, give them a shoutout on social media and offer them a present as a thank you.  [Learn the  importance of social media for small businesses .]

Use  customer tracking tools  to work out the annual and lifetime value of each customer. Buyers look for those types of numbers. They also like companies with lots of clients who have given permission to receive emails and texts.

Customer loyalty is also key in any involuntary exit plan. If a crisis arises, you can attract regular clients and raise money quickly with a one-time sale. For example, if you sell subscription services, offer a special annual deal to existing customers to generate an influx of cash.

According to Bain & Company , customers spend 67 percent more in their 31st to 36th months as a loyal patron than in the first six months. Customer relationship management software can help you nurture these relationships. See our review of the Freshworks CRM for an example.

Handing over responsibilities to employees

The hardest types of businesses to sell are mom-and-pop shops and one-man bands. To a buyer, it’s like buying a job, not a company. It’s also really hard to sell businesses where there are 10 to 20 employees but success is still the responsibility of the owner. That’s because it’s like buying the job of a senior manager.

Delegate an increasing number of responsibilities to your employees over time. Train them and trust them to take on key tasks. If they make a mistake, be there to help them fix it and build up their confidence. If you don’t delegate, you’re training helplessness instead of anything valuable.

If a buyer asks, “Have you spent time away from the business?” you want to be able to confidently and truthfully say something like, “I spent three months in Hawaii and got one update email from the team a week. Everything ran like clockwork.”

For an involuntary exit plan, knowing you can step away for a while and still draw money thanks to your responsible staff gives comfort if you’re suffering from ill health or burnout.

Paying down company debt

You should try to pay down as much company debt as possible. That’s because when one company takes over another, things like business equipment loans and factoring service agreements cannot be novated.

In other words, they have to be settled in full on “completion day” (the day you sell your business). Normally, whatever you owe creditors is subtracted from the agreed-upon price you sell your company for, so you want to have less debt to subtract. Paying down debt also reduces your monthly servicing bills, meaning more profit in the meantime.

Reducing debt should be part of your involuntary exit plan too. You can sell unneeded or unwanted assets to pay down outstanding bills.

Starting to save money

Selling your business costs a lot of money. There are lawyers’ fees, accountant fees, professional service fees, a commission to your broker and more. For a business with $1 million in annual revenue, expect to pay up to $150,000 for a successful sale. If a deal is agreed to but falls through, you’ll still have to pay your team of outside advisors and experts.

If your business is struggling financially, having a decent amount of money saved up gives you more time to delegate day-to-day tasks to staff and raise cash by selling assets. If you also shrink your payroll and look for other savings, this will buy you even more time, financially speaking.

Exit strategies for startups vs. established businesses

There are dozens of ways for owners and investors to exit their businesses; however, the path chosen often depends on the age and size of the company.

Exit strategies for startups

  • Initial public offerings (IPOs): IPOs are the favored way for many startup business owners to divest themselves, especially tech businesses that have already gone through a few rounds of funding. When you opt for an IPO, your business becomes a publicly traded and you and your investors should all make substantial returns. Bear in mind there are many regulation and governance hurdles to jump in preparation for an IPO.
  • Strategic acquisitions: Most times, startup business owners end up selling their companies to larger competitors in the same or a related industry. You sell the shares in the business to your acquirer and this results in a complete transfer of ownership. Quite often, startups are bought for some aspect of their business that is unique and valuable, not necessarily due to their levels of profitability or market share. 
  • Management buyouts (MBOs) : In an MBO, a team consisting primarily of your current management raises the money to buy you out. Returns for owners on MBOs can be good but are generally not as high as a strategic acquisition. Still, MBOs are an excellent way of ensuring the company remains in capable hands.

Exit strategies for established businesses

  • Merger or acquisition: For established businesses with good profitability and an impressive market share, you can merge with or be acquired by another company. Businesses are often valued at multiples of annual profit and the higher your turnover and profitability, the greater the multiple you’re likely to receive. If you want to stay involved with your business after a merger, you can make it a condition of the sale that you stay on the board of the business you’re selling and/or have a seat on the board of the merged company.
  • Liquidation: If you wish to exit the business on a faster timeline than it takes to find a buyer, liquidation is an option. You sell all your assets and settle all your existing debts, allowing you to extract the remaining residual value from your business as income. While quick, it’s much less lucrative than a sale or merger in most cases.
  • Bankruptcy: If your business is facing insurmountable debts, you have two choices. First, there’s Chapter 11 bankruptcy, which keeps your doors open while you restructure your debt. Second, there’s Chapter 7 bankruptcy, which allows you to settle company debts by selling off your assets. This is a tough decision to make, but bankruptcy can relieve many financial burdens your company is suffering, giving it a chance to do business again in the future. There are a few specialist venture capitalist and private equity firms that specialize in purchasing bankrupt or near-bankrupt companies too.
  • Spin-offs: If your business has several operating divisions, whether distinguished by geography, activity or both, you could spin them off into separate entities and sell them to realize their value. This way, you receive a payout and reduce the size of the operations you’re responsible for.

Word of caution

Beware of earn-outs. With an earn-out, you receive part of the agreed price for your company now and the remainder in tranches over a period of time based on the business’s continued performance.

It is perfectly normal not to receive your asking price in one go. However, if you agree that what you’re paid will be linked to the performance of the business once you’re no longer in control of it, you’ll be putting yourself in grave danger of not getting all the money you’re expecting.

Tips for executing an exit strategy

Now that you know what creating an exit strategy involves and how exits can differ for startups versus established businesses, follow these tips when executing your plans.

1. Bring in outside expertise.

You need to build your own professional team for the sales process because your buyer will almost certainly have one. You want to level the field as much as possible, but you also want people on your side who know the intricacies of selling companies.

Consider hiring part-time chief financial officers or fractional chief marketing officers well before you put your company on the market. Bring experienced, proven talent with wider connections in the business world to your C-suite to help you improve the organization first. They’ll be invaluable in helping you carry out your exit strategy when a deal is on the table.

These same professionals will have proven themselves adept at crisis management in their careers too. They’ll be able to help you get out of awkward financial situations and train your workers to handle management responsibilities.

2. Keep your accounts up to date and your accountants close.

Inform your accountants that you want to be in a permanent state of readiness in case you receive a purchase offer out of the blue or decide to put your company on the market. Once you’ve identified the financial areas of greatest interest to your buyer type, make sure your accountant updates the company’s finance reports on a weekly or monthly basis and keeps historical records of them. The  best accounting software  will come in handy.  [Related article:  How to Hire the Right Accountant for Your Business ]

3. Hire a corporate lawyer.

Retain a lawyer, preferably one with mergers and acquisitions (M&A) experience. Your buyer’s corporate lawyers will vigorously defend their interests and try to use the information you provide about your business during the due diligence process to bring down the selling price. You need someone on your team to advocate on your behalf.

4. Hire a business broker and M&A advisor.

Opinions differ on the effectiveness of business brokers and M&A advisors for companies with an annual revenue of less than $1 million. If you’re confident enough, it might be worth forgoing an advisor and handling the process yourself.

But what does a broker do? They market your business in many ways, often on websites like businessesforsale.com. They also handle initial inquiries, verify potential buyers have the required funds to purchase your company and sit in on the negotiations over price. Many try to engineer a bidding situation where two or more interested buyers make offers at the same time to try to drive up the price.

Brokers often also intervene during the due diligence stage. During due diligence, the buyer’s professional team of lawyers and accountants will ask for lots of detailed information about your company, often over a period of between three and six months. Their job is to help the buyer understand exactly what it is they’re buying. Tempers often become fraught during due diligence for a variety of reasons. When this happens, the brokers often act as go-betweens to smooth relations and keep the deal on track.

5. Create your own data room.

In years past, a buyer’s lawyer would enter a private room at your lawyer’s office called a “data room.” Here, they’d inspect financial and employment records, as well as documentation regarding intellectual property ownership and previous and ongoing legal disputes. Most data rooms are now virtual and the professional teams acting for the buyer and the seller usually email documentation to each other.

Create your own online data room as soon as you can and ask your accountants, lawyers and managers to submit updated reports every month. Delays in providing information can upset buyers — something you want to keep to a minimum.

You don’t need to cure all the imperfections in your company before putting it on the market. A common myth among sellers is that buyers want spotless, perfectly run businesses. They don’t. All they want is a company they can add value to and they expect a certain degree of imperfection.

Running your business like nothing else is happening

Once you’ve settled on an exit strategy for your business, don’t spend any more than 30 minutes per day on it, even if you have a deal on the table and it’s going through due diligence. Concentrate on running your business as well as possible to retain and build on the value you’ve already created. Buyers will expect this and they’ll be able to monitor if you’re protecting their interests from the updated information in the data room. Proceeding with business as usual while simultaneously preparing for the future is the best way to be ready for a voluntary or involuntary exit.

Bruce Hakutizwi contributed to this article.

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Resources: M&A Encyclopedia

Comprehensive articles on every step of the process of buying or selling a business from the most exhaustive encyclopedia of M&A articles in the industry.

Business Exit Plan & Strategy Checklist | A Complete Guide

It’s not enough to merely hand over the keys at the closing. You need a strategy. An exit strategy.

An exit strategy, as the term implies, is a plan to assist you in exiting your business. All exit plans will vary, but they all contain common elements.

The three common elements that all business exit strategies should contain are:

  • A valuation of your company. The process of valuing your company involves three steps, the first being an assessment of the current value of your business. Once this value is calculated, you should plan how to both preserve and increase that value.
  • Your exit options. After you have determined a range of values for your company and developed plans for preserving and increasing this value, you can begin exploring your potential exit options. These can be broken down into inside, outside, and involuntary exit options.
  • Your team. Finally, you should form a team to help you prepare and execute your exit plan. Your team can consist of an M&A advisor, attorney, accountant, financial planner, and business coach.

If you are considering selling your business in the near future, planning for the sale is imperative if you want to maximize the price and ensure a successful transaction. This article will give you a solid understanding of these elements and how you can put them together to orchestrate a smooth exit from your business.

Table of Contents

  • Measure the Value

Preserve the Value

Increase the value, inside exit options, outside exit options, involuntary exit options, team members, the annual audit, business exit plan strategy component #1: valuation.

Your exit strategy should begin with a valuation, or appraisal, of your company. The process of valuing your company involves three steps, the first being an assessment of the current value of your business. Once this value is calculated, you should then plan how to both preserve and increase the value of your business.

Let’s explore each of these components — assess, preserve, increase — in more depth.

Assess the Value

The first step in any exit plan is to assess the current value of your business.

Here are questions to address before beginning a valuation of your company:

  • Who will value your company?
  • What methods will that person use to value your company?
  • What form will the valuation take?

Who: Ideally, whoever values your company should have real-world experience buying and selling companies , whether through business brokerage, M&A, or investment banking experience. They should also have experience selling companies comparable to yours in size and complexity. Specific industry experience related to your business is helpful, but not essential, in our opinion. There are loads of professionals out there who possess the academic qualifications to appraise your business but who have never sold a company in their lives. These individuals can include accountants or CPAs, your financial advisor, or business appraisers. It is essential that your appraiser have real-world M&A experience. Without hands-on experience buying and selling companies comparable to yours, an appraiser will be unprepared to address the myriad nuances of the report or field the dozens of questions that will arise after preparing the valuation.

Action Step: Ask whoever is valuing your business how many companies they have sold and what percentage of their professional practice is devoted to buying and selling businesses versus other activities.

What Methods: Most business appraisers perform business valuations for legal purposes such as divorce, bankruptcy, tax planning, and so forth. These types of appraisals differ from an appraisal prepared for the purpose of selling your business. The methods used are different , and the values will altogether be different as well. By hiring someone who has real-world experience selling businesses, as opposed to theoretical knowledge regarding buying and selling businesses, you will work with someone who will know how to perform an appraisal that will stand the test of buyers in the real world.

Form: Your M&A business valuation can take one of two forms:

  • Verbal Opinion of Value: This typically involves the professional spending several hours reviewing your financial statements and business, then verbally communicating an opinion of their assessment to you.
  • Written Report: A written report can take the form of either a “calculation of value” or a “full report.” A calculation of value cannot be used for legal purposes such as divorce, tax planning, or bankruptcy, but for the purpose of selling a business, either type is acceptable.

Is a verbal or written report preferable? It depends. A verbal opinion of value can be quite useful if you are the sole owner and you do not need to have anyone else review the valuation.

The limitations of a verbal opinion of value are:

  • If there are multiple owners, there may be confusion or disagreement regarding an essential element of the valuation. If a disagreement does arise, supporting documentation for each side will be necessary to resolve the disagreement.
  • You will not have a detailed written report to share with other professionals on your team, such as attorneys , your accountant, financial advisor, and insurance advisor.
  • The lack of such a detailed report makes it difficult to seek a second opinion, as the new appraiser will have to start from scratch, adding time and money to your process.

For the reasons above, we often recommend a written report, particularly if you are not planning to sell your business immediately.

We have been involved in situations in which CPA firms have valued a business but had little documentation (one to two pages in many cases) to substantiate the basis of the valuation.

In one example, the CPA firm’s measure of cash flow was not even defined; it was simply listed as “‘cash flow.” This is a misnomer as there are few agreements regarding the technical definition of this term. As a result, any assumption we might have made would have led to a 20% to 25% error at minimum in the valuation of the company. By having a written report in which the appraiser’s assumptions are documented, it is simple to have these assumptions reviewed or discussed.

Note: When hiring someone to value your company, you are paying for a professional’s opinion but keep in mind that this opinion may differ from a prospective buyer’s opinion. Some companies have a narrow range of value (perhaps 10% to 20%), while other companies’ valuations can vary wildly based on who the buyer is, often by up to 100% to 200%. By having a valuation performed, you will be able to understand the wide range of values that your company may attain. As an example, business appraisers’ valuations often contain a final, exact figure, such as $2,638,290. Such precision is misleading in a valuation for the purpose of a sale. We prefer valuations that result in a more realistic price range, such as $2,200,000 to $2,800,000. An experienced M&A professional can explain where you will likely fall within that range and why.

Once you have established the range of values for your company, you should develop a plan to “preserve” this value. Note that preserving value is different from increasing value. Preserving value primarily involves preventing a loss in value.

Your plan should contain clear strategies to prevent catastrophic losses in the following categories:

  • Litigation: Litigation can destroy the value of your company. You and your team should prepare a plan to mitigate the damaging effects of litigation. Have your attorney perform a legal audit of your company to identify any concerns or discrepancies that need to be addressed.
  • Losses you can mitigate through insurance: Meet with your CPA, attorney, financial advisor, and insurance advisor to discuss potential losses that can be minimized through intelligent insurance planning. Examples include your permanent disability, a fire at your business, a flood, or other natural disasters, and the like.
  • Taxes: You should also meet with your CPA, attorney, financial advisor, and tax planner to mitigate potential tax liabilities.

Important: The particulars of your plan to preserve the value of your company also depend on your exit options, which we will discuss below. Many elements of your exit plan are interdependent. This interdependency increases the complexity of the planning process and underscores the importance of a team when planning your exit.

Only after you have taken steps to preserve the value of your company should you begin actively taking steps to increase the value of your company.

There is no simple method or formula for increasing the value of any business. This step must be customized for your company.

This plan begins with an in-depth analysis of your company, its risk factors, and its growth opportunities. It is also crucial to determine who the likely buyer of your business will be . Your broker or M&A advisor will be able to advise you regarding what buyers in the marketplace are looking for.

Here are some steps you can take to increase the value of your business:

  • Avoid excessive customer concentration
  • Avoid excessive employee dependency
  • Avoid excessive supplier dependency
  • Increase recurring revenue
  • Increase the size of your repeat-customer base
  • Document and streamline operations
  • Build and incentivize your management team
  • Physically tidy up the business
  • Replace worn or old equipment
  • Pay off equipment leases
  • Reduce employee turnover
  • Differentiate your products or services
  • Document your intellectual property
  • Create additional product or service lines
  • Develop repeatable processes that allow your business to scale more quickly
  • Increase EBITDA or SDE
  • Build barriers to entry

Note: A professional advisor can help you ascertain and prioritize the best actions for your unique situation to increase the value of your business. Unfortunately, we have seen owners of businesses spend three months to a year on initiatives to increase the value of their business, only to discover that the initiatives they worked on were unlikely to yield any value to a buyer.

Business Exit Strategy Component #2: Exit Options

After you have determined a range of values for your company and developed plans for preserving and increasing this value, you can begin exploring your potential exit options.

Note: These steps are interdependent. You can’t determine your exit options until you have a baseline valuation for your company, but you can’t prepare a valuation for your business until you have explored your exit options. A professional can help you determine the best order to explore these steps, or if the two components should be explored simultaneously. This is why real-world experience is critical.

All exit options can be broadly categorized into three groups:

  • Inside: Buyer comes from within your company or family
  • Outside: Buyer comes from outside of your company or family
  • Involuntary: Includes involuntary situations such as death, divorce, or disability

Inside options include:

  • Selling to your children or other family members
  • Selling to your business to your employees
  • Selling to a co-owner

Inside exits require a professional who has experience dealing with family businesses, as they often involve emotional elements that must be navigated and addressed discreetly, gracefully, and without bias. Inside exit options also greatly benefit from tax planning because if the money used to buy the company is generated from the business, it may be taxed twice. Lastly, inside exits also tend to realize a much lower valuation than outside exits. Due to these complexities, most business owners avoid inside exits and choose outside options. Fortunately, most M&A advisors specialize in outside exit options.

Outside exit options include:

  • Selling to a private individual
  • Selling to another company or competitor
  • Selling to a financial buyer, such as a private equity group

Outside exits tend to realize the most value. This is also the area where business brokers, M&A advisors, and investment bankers specialize.

Involuntary exits can result from death, disability, or divorce. Your plan should anticipate such occurrences, however unlikely they may seem, and include steps to avoid or mitigate potential adverse effects.

Business Exit Strategy Component #3: Team

Finally, you should form a team to help you plan and execute your exit plan. Many of these steps are interdependent — they are not always performed sequentially, and some steps may be performed at the same time. Forming a team will help you navigate the options and the sequence.

Your team should involve the following:

  • M&A Advisor/Investment Banker/Business Broker: If you are considering an outside exit.
  • Estate planning
  • Financial planning
  • Tax planning, employee incentives, and benefits
  • Family business
  • Accountant/CPA: Your accountant should have experience in many of the same areas as your attorney, along with audit experience and retirement planning. Again, it is unlikely that your CPA possesses all of the skills you need. If further expertise is needed, the CPA should be able to access the skills you need, either through colleagues at their firm or by referral to another accountant.
  • Financial Planner/Insurance Advisor: This team member is critical. We were once in the late stages of a sale when the owner suddenly realized that, after deducting taxes, his estimated proceeds from the sale would not be enough to retire on. An experienced financial planner can help with matters like these. They should have estate and business continuity planning experience, as well as experience with benefits and retirement plans.
  • Business Coach: A business consultant or coach may be necessary to help implement many of the changes needed to increase the value of your business, such as building infrastructure and establishing a strong, cohesive management team. Doing this often requires someone who can point out your blind spots. A coach can help you take these important steps.

Where to find professionals for your team

The best way to find professionals for your team is through referrals from trusted friends and colleagues who have personally worked with the professional in question. Don’t ignore your intuition, however. It’s important that you and your team members have good chemistry.

We recommend that you assemble your professional advisors for an annual meeting to perform an audit of your business. The goal of this audit is to prevent and discover problems early on and resolve them. As the saying goes, “An ounce of prevention is worth a pound of cure.”

Your advisors are a valuable source of information. This annual meeting is an opportunity to ensure that they’re all on the same page and that there are no conflicts among your legal, financial, operational, and other plans. An in-person or virtual group meeting enables you to accomplish this quickly and efficiently.

A sample agenda might include a review of the following:

  • Your operating documents
  • New forms of liability your business has assumed
  • Any increase in value in your business and changes that need to be made, such as increases in insurance or tax planning
  • Capital needs
  • Insurance requirements and audit, and review of existing coverages to ensure these are adequate
  • Tax planning — both personal and corporate
  • Estate planning — includes an assessment of your net worth and business value, and any needed adjustments
  • Personal financial planning

If you are contemplating selling your business, creating an exit plan will answer these critical questions:

  • How much is my business worth? To whom?
  • How much can I get for my business? In what market?
  • How much do I need to make from the sale of my business to meet my goals?

Taking the strategic steps discussed in this article — assembling a stellar professional team and optimizing the team’s collective experience — will get you well on your way toward successfully selling your business and turning confidently toward your next adventure.

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Certified Exit Planning Advisor with Expert Merger and Acquisition Consulting Services

An exit strategy is when the business owner is planning to sell their ownership in a company to another business owner, another company or investors. Having an exit plan in-place gives the business owner a way to reduce or liquidate their stake in a business and, if the business is successful, make a substantial profit. Bringing in a certified exit planning advisor will help guide you through the process.

Learn how an Outsourced Accounting Partner can help you grow

What does an exit planner do.

What is “exit planning,” exactly? An exit plan refers to the process by which a business owner leaves a business. This most commonly happens when a business owner retires, sells the business, or passes the business on to a successor.

Exit planners facilitate this process by assisting with the legal, logistical, or financial steps necessary for such a transition to take place, such as helping you with tax changes that may affect the timing of your transition.

Exit planners have a responsibility to ensure that the business is maintained after the owner departs and also to ensure that the owner has the financial stability to make a well-timed exit. They can also help you find the right buyer when the time comes to sell.

Perhaps most importantly, an exit planner can help you distill your company’s core values and make sure that these values are preserved after a change in leadership. Exit planners can help you build a legacy and leave behind something you and your family can take pride in.

When Should I Start Planning For An Exit?

The Right Exit Strategy For Your Business

The answer depends on what you expect from your exit.

If you’re planning on passing the company to a child, 10 years is a good timeline to plan for other sources of income in retirement.

If you are looking at an IPO, plan around growth of $1m to $100m in 7-10 years (so you have a shot at an IPO).

If you’re hoping to get acquired by a larger company, be certain your IP is secured and your financials are in order (3 years out is ideal for best EBITDA).

Hiring Business Exit Plan Advisors

In most cases, it makes sense to hire a business exit plan advisor. At the very least, a team of exit planning advisors can provide a fresh set of eyes to help you evaluate the financial strength and trajectory of your business, such as understanding gross profits and other important data.

This is crucial when the exit strategy includes selling the business to another company. Most business owners have an inflated view of their company’s value. An independent exit planner can provide an objective business valuation based on your company’s current assets, market value, or discounted cash flow.

These may be specialized skills that you and your staff don’t possess—or that might distract you from your core business processes.

Exit planning consultants can also help you develop an actionable communication plan so that you can inform your employees, investors, and stakeholders of what the future holds. Ultimately, their services help you develop a strategy that works for both you and your company.

Benefits of an exit strategy:

Your family:.

Like estate planning, devising a strategic exit ensures you’ll protect your spouse or heirs from engaging in unnecessary decision-making & tax burdens by handling these things before they have to. 

Your retirement:

Practically speaking, you want to maximize the value of the wealth your business can afford you, beyond your annual salary. Maybe the goal is a lump sum that will buy a vacation home in Palm Springs; maybe it’s an annual dividend that simply allows you to live without worry. Either way, it’s important to consider your own financial goals here—after all, you’re the one who built the business. 

Transition Planning:

Your employees and Board of Directors will likely work hard to help you achieve your exit goals, and it is in the best interest of everyone to facilitate a smooth business transition. If you plan ahead thoughtfully, you can create certainty and stability during the business transition.

Maximizing value & growth potential:

Whether you’re eyeing a $20M acquisition or just looking to grow aggressively, implementing tangible steps to ensure your financials and cash flow forecasting are sound will improve your outcomes.  

Types of Exit Strategies

Mergers & acquisitions.

This is the most common exit strategy. M&A benefits investors, founders, and equity-holding employees by offering a direct return on investment in a lump sum. Mergers and acquisitions consulting can help your company achieve the maximum acquisition value for your exit.

Initial Public Offering

An IPO means transitioning from a privately-held company to a publicly traded one. You’ll work with a bank to set the value of your company’s shares, and then hope that the market drives the value up even further. IPOs have strict SEC requirements that accompany the process and accurate financial are essential to gaining SEC approval for your IPO.

Liquidation

Typically, liquidation is not ideal. It’s often the result when there’s a lack of strategic exit planning. Certain industries do not have a robust market for M&A, IPO or succession, in those cases liquidation is the best option for an exit.

Exit Planning Services

To get started on your exit plan, you need an experienced Exit Planning Advisor and team of trusted advisors who can fully understand your goals and create a customized plan to achieve them. The best way to plan for an exit is to start early so time is on your side in case your goals, current market conditions, or the value of your business changes. Use our exit planning services will equip you with a team of experts to guide you through your exit planning and capitalize on your profit.

Exit Planning Begins with Excellent Financials

Whatever your path forward, a successful exit plan is best served by impeccable financial record keeping and the business security you will gain from letting the numbers guide your insights into your business.

The TGG Way™ implements the excellence in financial reporting that large corporations use to guide their business decisions and applies it to small and mid-sized companies, giving them the insights and decision-making certainty to plan for the future, whatever that future may hold.

HOW TO START DEVELOPING YOUR EXIT STRATEGY

What does it take to make a strategic exit plan? Exit strategy consulting will most commonly include these basic steps:

  • Prepare accurate accounts of your personal and professional finances
  • Consider different exit strategies (selling, transitions, etc.)
  • Communicate your intention to your investors and stakeholders
  • Develop an exit plan that ensures that stakeholders are repaid
  • Begin transitioning responsibilities to your successor (if applicable)
  • Communicate the plan and its timing to your employees
  • Inform your clients of your plans

The exact strategy may depend on the nature of your plan. For instance, if you have a successor, it may make sense to transition slowly over time instead of simply retiring and introducing a new leader all on the same day.

Similarly, if you’re closing your doors for good, you may need to direct your clients to an alternative business. Otherwise, you can introduce your former customers to your company’s new leadership to ensure a smooth transition.

The Exit Planning Process

The Exit Planning Process has several steps that include the following:

  • Understand the goals of the business owner(s): What would the business owner(s) like to achieve with this exit? A complete understanding of those goals will guide the entire exit planning process.
  • Determine the true value of the business: Establishing the business valuation is a critical next step after setting goals because it determines whether or not the exit objectives can reasonably be met.
  • Continue to build & preserve the value of the business: Create customized plans that continue to build the business’s value over time.
  • Sell to a third party or transfer to management or family members: Help the owner(s) prepare for a sale to a third party or transfer plan that keeps them in control of the business until the entire purchase price is received.
  • Create a contingency business plan: Consider what would happen if the owner does not live to transfer or sell the business. A plan must be put into place to mitigate this risk.
  • Financial planning and estate planning: Coordination is done with the owner to make their goals a reality.

HOW TO DECIDE WHETHER TO CLOSE OR SELL A BUSINESS?

Should you sell your business or close it entirely? In most cases, it makes the best sense to sell your business. That’s because an acquisition exit strategy allows you to earn money by selling your business assets.

Even if your company is facing cash flow problems, it’s rare that a business has no value whatsoever, and the right buyer may be able to turn things around.

It only makes sense to close the business if you can’t find the right buyer or if you don’t feel confident that your core values will be maintained under new leadership. Should you decide to close your business, you can still liquidate company assets to cover any unpaid costs.

If you’re on the fence, it may help to speak with a team of exit planning advisors who can help you evaluate your business and make a choice that’s right for you.

When it comes to business exit planning, Abilene business owners will want to find a planner who understands the needs and challenges of the local community.

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Faq section:.

What size business is best suited for each type of exit strategy?

Mergers and acquisition agreements can be essential for small and medium sized companies. The same is true for an Initial Public Offering (IPO) when the small or medium sized businesses are in an emerging industry. Any sized business can choose to liquidate. If you’re unsure on what exit strategy is right for you, reach out to TGG, your trusted merger and acquisition consulting company, and we can help you determine the best way to move forward.

How can I make sure my company is prepared for exit?

The best answer is to have true GAAP compliant financial statements and your financials are done on an accrual basis. You should also start on your exit plan at least 3 years before you plan to sell. TGG succession planning consultants have helped dozens of businesses plan and prepare for an exit by getting their financials in order with GAAP and accrual accounting.

What is exit planning in business?

Exit planning refers to the development of a strategy that allows a business owner to leave the business. Exit planning is necessary when a company leader retires, sells the company, or closes the company entirely and can also include a succession plan for installing new company leadership.

Why is an exit plan important for a business?

An exit plan develops a focused strategy for a major business transition. It ensures that the timing of the exit is right for both the business and the owner and that all employees, clients, and stakeholders are made aware of the transition.

Most importantly, an exit plan provides an accurate valuation of the business, a vital need when selling the business to another party.

What are the skills of an exit planner?

Exit planners must possess a variety of organizational and financial skills, including:

  • Team leadership
  • Financial valuation
  • Project management
  • Communication skills
  • Tax preparation and planning

Exit planners must also be capable of screening potential buyers to ensure that the company transitions to the right party.

What are the key elements of an exit strategy?

An exit strategy will commonly include these elements:

  • Business valuation
  • Communication plan
  • Tax calculation and plan
  • Personal plan for the owner
  • Choice of exit options (closing, selling, etc.)
  • Description of the owner’s values and vision

Planners can provide exit planning services while working alongside existing leadership to ensure that the final plan reflects the company mission and the owner’s vision and goals.

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The exit planning institute (epi) is the top authority in exit planning, rapidly accelerate the value in your client’s business with a holistic exit planning strategy and value acceleration automation powered by maus valuemax and epi.

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Exit Planning Institute​

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Designed for CEPA's

The exit planning institute.

The Exit Planning Institute is an education company that provides professional advisors with the content, tools, and training to deepen their working relationship with business owners. The Certified Exit Planning Advisor Credential (CEPA) enables advisors to strengthen their client relationships, be more holistic in their process, and become an owner’s most valued advisor.

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Through the process of Exit Planning using the Value Acceleration Methodology, owners can build more valuable companies, have stronger personal financial plans, and align their personal goals. Earning CEPA doesn’t change a professional advisor’s expertise, it expands their knowledge base, enhances their ability to engage business owners, and have value-added conversations around growth and exit. Maus exit planning software drives this process.

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The latest Exit Planning Institute Content

Maus is the key to growth and EPI is the best exit planning education partner in existence. Learn more about the Exit Planning Institute and enjoy these topical articles

EPI Exit Planning Institute and Maus Softwre

5-4-3-2-1: Five Things Every Business Owner Must Know About Exit Planning

The process of growing a significant company takes time and can be complex. This white paper takes the Value Acceleration Methodology and breaks it into 5 easy concepts as we introduced as 5-4-3-2-1. Though easy to understand as a business owner you may be sitting here still wondering “how do I implement this?”

Maus Exit Planning Human Capital with EPI

The Five Stages of Value Maturity

Owning a business comes with more than its fair share of risks. To increase value and minimize risks in your business, follow the 5 Stages of Value Maturity.

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How Exit Planning Institute Focused on Improving Their Human Capital

EPI made a conscious decision to invest in their human capital to have immediate short-term results and long-term value growth. See how they improved their business value and grew the human capital in their organization.

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IMAGES

  1. Transition & Exit Planning

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  2. Seven-Step Process

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  3. Maximise thru business exit planning

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  4. How to Create a Business Exit Strategy and Avoid Costly Mistakes

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  5. 7 Business Exit Strategies

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  6. Your Business

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VIDEO

  1. PROPER ENTRY/EXIT PLANNING

  2. Crafting Your Business Exit Strategy

  3. Planning for Business Transition

  4. Offplan project to be delivered in 4 months time. Call 09019600997 to buy at affordable rate#fy

  5. Corporate planning process

  6. 02. Plan Purchase

COMMENTS

  1. Exit & Succession Planning Software Tools

    Maus truly is the premier business exit planning software, and together, we can achieve a great outcomes! What Else Get Serious About Value Measure in Order to Manage What is your current level of exit readiness?

  2. Exit Planning

    to Plan An intuitive platform to help advisors get more done by attracting, engaging, and delivering to more business owners through Exit Planning. See How it Works The demand for effective Exit Planning has never been greater. 6 Million Employer businesses currently in operation 80% Of Owners want to stop working in the next 10 years 20%

  3. How to Choose Exit Planning Software

    Exit planning is a process - for advisors, there are few, if any, standards for building out their business models. With experience, advisors often change and evolve their practices and their deliverables. However, once software solutions are selected and embedded in their model, it can be difficult and costly to make changes.

  4. Exitplanning.com Solutions

    Streamline your planning process with our advanced Exit Planning software. Start Planning

  5. How to Develop an Exit Plan for Your Business

    An exit strategy is often thought of as the way to end a business — which it can be — but in best practice, it's a plan that moves a business toward long-term goals and allows a smooth transition to a new phase, whether that involves re-imagining business direction or leadership, keeping financially sustainable or pivoting for challenges.

  6. The ExitMap

    The ExitMap ® helps start the critical first conversation and creates exit planning consulting opportunities focused on the most important financial decision of a lifetime. Your ExitMap Test Drive: This 15-minute questionnaire generates a complimentary set of the three ExitMap® reports (Assessment©, Analysis© and Action Plan©).

  7. Exit Planning Software

    Flexible EPIC planning documents are never locked. Instead, you can modify and customize every aspect of EPIC's output and combine it with your other planning deliverables. Compatible You can use the EPIC system without downloads, installations, or updates. BEI maintains the software in an online environment. Confidential

  8. Exit Strategy: Definition, Types, Business Plan (+Template)

    A business exit strategy outlines the steps that a business owner needs to take to generate maximum value from selling their company. A well-designed business exit strategy should be flexible enough to allow for unforeseen contingencies and account for the fact that business owners don't always decide on their own terms when to exit.

  9. Exit Planning Process Solutions

    Solutions Planning Solutions 0:59 Manage the Exit Planning Process Business owners want and need advisors who can create and execute a strategy that allows them to leave their businesses on their terms: when they want, for the money they need, and to whomever they choose.

  10. Business Exit Strategy Planning: How to Prepare for an Exit

    Updated Jan 29, 2024 Table of Contents Mark Fairlie Contributing Writer at business.com You wrote a business plan to launch your company. To say goodbye to it, you need an exit plan to get the maximum possible return and to limit any future exposure to what happens to the company after your departure.

  11. Business Exit Plan & Strategy Checklist

    Business Exit Plan Strategy Component #1: Valuation Your exit strategy should begin with a valuation, or appraisal, of your company. The process of valuing your company involves three steps, the first being an assessment of the current value of your business.

  12. exitlabs

    Use professional exit planning software to determine the value of your business & calculate your exit readiness scores. Track your improvements on your dashboard. EXPERT ADVISORS Upgrade for optional 1-on-1 monthly sessions with a Certified Exit Planning Advisor (CEPA). Your advisor will provide advice specific to your personal & business goals.

  13. Using BEI's New Planning Software & The Importance of Technology in the

    One of the primary reasons for utilizing software in your planning practice is the ever-increasing importance of data in prioritizing tasks, managing teams, and executing on your clients' plans. Having a software to manage multiple clients and multiple plans enables you to track progress with your clients and make decisions based on their ...

  14. Exit Planning Advisor & Consulting Services

    Planners can provide exit planning services while working alongside existing leadership to ensure that the final plan reflects the company mission and the owner's vision and goals. TGG Accounting's exit planning experts help you plan the right exit strategy for your business. Contact a certified exit planning advisor to know more.

  15. The Power of a Certified Exit Planning Advisor (CEPA)

    Delap has a growing team of CEPAs who are ready to assist you in increasing the value of your business and maximizing the after-tax benefits of your wealth. Delap's CEPA team includes individuals with expertise in tax planning, business quality of earnings analysis, internal process review and improvement, and wealth management.

  16. Succession & Exit Planning

    An exit plan should be developed over time. It is a strategic plan and, in most businesses, will take 12 to 18 months to design and implement. It should always include expert advisers who specialise in Business Succession and Exit Planning and can help in designing the most appropriate plan to maximise business value and achieve a successful exit.

  17. Exit Planning Advisors

    Exit Planning Advisors Unlock the exit planning secrets to accelerate value. Secure more retainer clients using the Capitaliz suite of digital business advisor tools.

  18. Maximizing The Value Of Your Business To Ensure A Successful Exit

    A successful business exit and succession planning requires careful consideration of your goals, an assessment of your business's current state, value protection, value maximization and strategic ...

  19. EPI Partnership

    An industry-leading credential that helps you effectively engage with business owners. The Value Acceleration Methodology, a complete framework for Exit Planning. A robust and unique catalog of free webinars featuring exit planning, business, marketing professionals, and more. An extensive national Chapter Network with monthly events and ...