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Start » strategy, ready to move on how to create an exit plan for your business.

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:

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:

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:

Steps to developing your exit plan

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

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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How to Create an Exit Strategy for Your Small Business

And Why Your Business Needs One

Why Small Businesses Need Exit Strategies

Liquidation, sell the business to someone you know, sell the business in the open market.

An IPO (Initial Public Offering)

Choosing an exit strategy for your business might not seem like an obvious step when you’re just getting started, however planning ahead is an important part of building a business. An exit strategy is a plan for how you will eventually leave the business. It also includes details on what will happen to the enterprise after you have left.

We’ll explain the value of having a plan in place , discuss your options for exiting the business, and weigh the benefits and drawbacks of each scenario. 

All businesses need an exit strategy at some point, even if that just means transferring ownership of the company when one owner decides to retire. Leaving a business can be stressful, and emotions can often cloud your judgment. Should this occur, a good exit strategy that you’ve come up with in advance will enable you to address tough situations rationally. 

Here are some things to consider when making your exit strategy:

Having an exit strategy in place early on can help you to make decisions that will support your eventual exit. This allows the process to be as easy and profitable as possible.

You’ll want to revisit your exit strategy often to see if it still fits your situation and goals. Then, you can make adjustments as necessary. 

Learn five common exit strategies for small businesses.

Liquidation is the process of closing a business and selling off its assets or redistributing them to creditors and shareholders. There are two main ways to do this.

Close and Sell Assets as Soon as Possible

One option is to close the business and sell the assets as soon as you can. This is often a last resort method for a business, as you only make money off the assets you can sell, while valuable items like client lists or business relationships are lost. 

Before liquidating a business, you’ll want to work with liquidation experts to make sure you’re following the right procedure for selling your assets, paying back all debts, employee protocol, and finalizing all legal and financial commitments. 

Liquidating Your Business over Time

The other common liquidation option is paying yourself until your business finances run dry, then you ultimately close the business. This is often referred to as a “lifestyle business.” The owner takes the funds out over time instead of reinvesting them back into the business.

You may decide to sell the business to someone whom you’re familiar with, whether that’s an existing partner, a manager or employee, a customer, a friend, or a family member. 

Commonly, during a seller financing agreement, the buyer is able to pay off the business gradually. This allows the seller to maintain an income while the buyer begins to run the business without making a large initial investment. The seller can also act as a mentor during the transition, which helps to make the process smoother for everyone. 

Be aware that valuation, business transfer, and estate planning issues can be complex when selling to a family member. You’ll want to involve attorneys, accountants, and family successors when planning the transition.

Buying an already established business can be an attractive option for entrepreneurs. This is because it’s less risky than starting a new enterprise, and seller financing makes the purchase easier to fund than it would be if you were financing a startup. Buyers also benefit from assuming a business’ existing systems, its sales stream and cash flow, established client base, and brand reputation. 

For these reasons, it’s best to put in the effort to prepare your business in advance and make it as appealing as possible to attract potential buyers. The U.S. Small Business Administration can also be an asset, as it provides helpful information regarding closing or selling your business. 

Sell to Another Business 

In some cases, a competitor or similar business may want to acquire your company. Your business could be a strategic fit for their enterprise or a competitor may want to eliminate the competition. This is a good option for someone who wants to continue work in their chosen industry but with less responsibility. 

Generally during acquisitions, the business owner is offered a position with the new company. If this is the case, make sure you’re comfortable with the role and fully understand the dynamics and culture of the new workplace. You’ll want to work with an attorney when structuring the acquisition agreement.

An initial public offering usually refers to when a business first sells its shares of stock to the public. Companies typically go through this process to raise additional capital. Going public is a big step for any business—it’s a long, expensive process, and afterward the company is subject to public reporting requirements.

U.S. Chamber of Commerce. " Ready to Move On? How to Create an Exit Plan for Your Business ." Accessed May 10, 2021.

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exit plan for small business

Small Business Exit Strategies: A Brief Rundown of Your Way Out

When you first start a business, the last thing you’re thinking about is leaving it. But, life gets in the way of plans. That’s why you need an exit strategy before starting your small business. Exit strategies help make sure you, your business, and investors are protected.

There are a number of exit strategies for small business you might consider. The path you choose depends on a unique set of circumstances, like business size.

What is a company exit strategy?

An exit strategy, or plan, outlines how a business owner plans on selling their investment in their business. Exit strategies help business owners have an out if they want to sell or close the business. Entrepreneurs must create a business exit plan before starting a business and tweak it as the business grows and the market changes.

So, where does your strategy go? Include your exit strategy in the financial section of business plan .

You especially need a strong exit strategy if you plan on seeking small business financing . Investors and lenders want to know that their money is protected if your business fails.

If nothing else, the central question your business’s exit plan needs to answer is:

Small business exit strategies

Whether you’re writing your business plan for the first time or updating it, take a look at these types of exit strategies. Remember to weigh the pros and cons of each to determine if it’s feasible.

five small business exit strategies arranged on a roadmap illustration

In a merger, two businesses combine into one. Mergers increase your business’s value, which is why investors tend to like them.

To go through with a merger, you still need to be a part of the business. Through a merger, you will be an owner or manager of the new business. Your employees might be employed by the new merged business. But if you want to sever your ties with your business, a merger is not the best exit strategy for you.

There are five main types of mergers:

Before you merge businesses, make sure that the new business is a good fit with your current one. You could end up losing revenue otherwise.

2. Acquisition

An acquisition is when a company buys another business. With an acquisition exit strategy, you give up ownership of your business to the company that buys it from you.

One of the positives of going with an acquisition is that you get to name your price. A business might be apt to pay a higher price than the actual value of your business, especially if they’re a competitor.

But if you’re not ready to let go of your business, an acquisition might not be the right exit strategy for you. You may need to sign a noncompete agreement promising not to work for or start a new business similar to the one you just sold.

There are two types of acquisition: friendly and hostile. If you have a friendly acquisition, you agree to be acquired by a larger business. However, a hostile acquisition means that you do not agree. The acquiring business purchases stakes to complete the acquisition.

If an acquisition is your exit strategy, your acquisition should be friendly. You likely will attempt to find an acquiring business that you want to sell to.

3. Sell to someone you know

You may want to see your business live on under someone else’s ownership. In many cases, you can sell to someone you know as an exit strategy.

Take a look at some of the people you could sell your business to:

Before selling your business to someone you know or are acquainted with, consider the drawbacks. You don’t want to jeopardize personal relationships over your business. Disclose things like liabilities and the profitability of your business before a family, friend, or acquaintance buys it from you.

4. Initial public offering

An initial public offering , or IPO, is the first sale of a business’s stocks to the public. This is also known as “going public.”

Unlike a private business, a public business gives up part of their ownership to stockholders from the general public. Public businesses tend to be larger. They also (generally) go through a high-growth period. By taking your business public, you can secure more funds to help pay off debt.

However, going public might be difficult for small businesses because it costs a significant amount of time and money. If you want a fast exit strategy, an IPO might not be the way to go.

To start an IPO, you need to find an investment bank, collect financial information, register with the Securities and Exchange Commission (SEC), and come up with a stock price.

5. Liquidation

Another exit strategy for small business is liquidation. With liquidation, business operations end and your assets are sold. The liquidation value of your assets go to creditors and investors. However, your creditors—not your investors—get first dibs.

Liquidation is a clear-cut exit strategy because you don’t need to negotiate or merge your business. Your business stops and your assets go to the people you owe money to.

If you liquidate your business, however, you lose your business concept, reputation, and your customers. Your business will not live on like in other exit strategy options.

How to write an exit strategy business plan

Again, you must include your exit strategy at the end of your business plan. That way, you can reference it if your business starts going south. And, potential investors can determine if you have a strong plan in place to protect their money if you leave.

When coming up with your exit strategy, consider the following factors:

Here is an exit strategy example you might include in your business plan:

Keep in mind that you will update your business plan and exit strategy as your company goals change.

For example, your original exit plan may have been to merge with another business. But after 25 years of owning your business, your daughter says she wants to buy it from you. If you decide to sell instead of merge, update your business plan to reflect your new exit strategy.

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This article has been updated from its original publication date of December 27, 2016.

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Business Exit Planning

What is Exit Business Planning? How To Develop an Exit Plan For a Small Business

Business Exit Planning is part of every successful business plan. Exit planning guides you on how you can leave your business. You do not want to bear the loss when you close your business.

It answers the question of what you will do after ending your business operations. 

It helps you make a graceful exit without risking your investment. Strong exit planning will help you to convince investors that their investment is in safe hands.  

No matter if you are running a successful business or handling failure, an exit plan will be part of your business strategy. 

Want to learn more about exit planning?  keep reading.

This guide will clarify everything from smart exit strategies to how to develop an exit plan.

Make Your Business Exit Smooth and Rewarding

Use WiseBusinessPlans Business Exit Strategy Cosultation and get the most out of exiting business.   

What Is Business Exit Planning?

” An exit planning allows an entrepreneur to sell his business to maximize the value of Company “

An exit strategy differs from business to business. It depends on the size of the company or what type of involvement you want in your business.

If an entrepreneur wants to sell a 100% share of his company, an exit planning strategy should remove all his involvement from the company.

For example

If you have a company that is not making a profit; It is suggested to make an exit plan to get rid of the business. The exit plan for the non-profitable company should try to minimize loss.

If your company is generating good profit, an exit plan should maximize the profit.

A good exit plan gives maximum value to the entrepreneur when he sells his company.

Importance of Having an Exit Plan

Are you still unclear about why you should have an exit plan? Go through these points for having a clear idea about the importance of exit planning.

7 Smart Business Exit Strategies

There is no right or wrong exit plan. Whenever you are ready for an exit, choose the strategy that will work for you.

There are many factors that you must take into consideration when choosing a strategy. Such as :

These three factors will help you choose an exit strategy smartly.

Let’s discuss the smart strategies to exit your business.


Merger & acquisition (m&a).

Merger & Acquisition is referred to as M&A. The process of merger & Acquisition is different.

In a merger, two companies join hands for better benefits and rapid growth. All their resources, brand name, tax, liabilities everything become one. In a merger, money is not exchanged from both sides.

The acquisition is different from merging. In acquisition, a company purchases another company. Ownership will be changed. Everything will be transferred to the new owner. In acquisition, money is exchanged. A company can purchase a portion of the share or the whole company.

M&A benefits both companies. You can merge or sell your company to another big company.

Larger companies often hunt small companies to be purchased. They want to eliminate the competition and increase their geographic footprint.

For example:

In the digital world, Google and Android merged for better benefits. Google was a large IT company. However, Android was a start-up and struggling to make a name in the market. 

Android was taken by Google for $50 million. After the acquisition, Android made a noticeable share in the mobile phone market.

Merger And Acquisition M&A Business Plan

When it comes to M&A transactions, leaving the details to Wisebusinessplans can save you time, money, and effort. To reach your business goals, our consultants can write a business plan for you. A well-prepared M&A Business Plan will allow you to get back to work quickly.  

Initial Public Offering (IPO)

IPO is an exit strategy that allows companies, and private Investors in companies sell their Share to public Ex Alibaba IPO raised $21.8 billion on Sep 2014

Private investors hold equity in companies. They can sell their private equity (PE) to the public when they need cash. 

Companies also use this strategy to raise funds. Take Alibaba for example. Since its IPO in 2014, they have significantly increased its products and services portfolio and its revenue has increased

Exit Business Strategies to Get You What You Want

Use WiseBusinessPlans Business Exit Strategy Cosultation and get the most out of exiting business. 

Management Buyout

A management buyout is referred to as MBO. In this strategy, the current management of the company can purchase a portion of the shares or the whole company if they can pool the resources. 

This exit method benefits both seller and buyer. MBO selling process can be done quickly as the management team is already familiar with the business and its potential. 

The current management will assume more senior roles in the new company. 

As they are already running the company, an MBO will increase their loyalty towards the company and you may also be able to retain a position like an advisor, etc.

Selling to a Partner or Investor

You can sell your stakes in the company to your business partner or an investor. However, this applies to you when you are not a sole proprietor.

The partner or investor buying your share is called ‘friendly buyer’. Mostly, this person is from your circle of friends or family or someone you trust.

Liquidation means closing your business by selling all your assets to get cash.

Business Liquidation is often considered a quick strategy to get out of business. If your business is going well, you can sell off your assets at a good price and can maintain cash flow.

Liquidation is a clear-cut strategy to end your business journey. However, if you have creditors, the money will go to pay off the debt first before you pocket anything.

Before liquidation, make sure to do these things for a smooth transition.

Acquihire is when someone buys your company with the sole purpose to acquire your team. 

An acquihire benefits skilled employees of your company as it provides them with growth opportunities and you can be sure that they will be taken care of.

Filing for bankruptcy is your last resort in exiting your business. A bankruptcy is filed when you cannot pay your debts or liabilities and the court sells your business assets and give creditors pennies for a dollar.

Bankruptcy comes with bad consequences for your credit report. It might become hard for you to start a new business after bankruptcy unless you are Donald Trump.

Settles your debts and liabilities

Makes it hard for you to get credit in the future

How to Develop an Exit Plan?

A good exit plan provides you maximum value when you sell your company. Before starting to develop, you need to ask a few questions to yourself.

These three questions will clarify things. Answering these questions will help you find the right exit strategies for your business.

If you do not want any involvement in the business, all shares could be sold. You can liquidate the company, and remove your involvement.

Objectives of your Exit Business Strategy

To get maximum value for a company, you should set your exit business strategy objectives.

These objectives will help you understand your requirements. You want maximum return on investment, and knowing your goals will support you to sell your company for a good profit.

Make Business Finance Report

Prepare your finance report for a better understanding of your company’s account and assets.

A clear finance report will enable you to understand your business performance and value. Having a clear idea of finances will help in negotiations with buyers.

As you are going to sell your business, it is recommended to have clear finances. Pay off the creditors if you have any. Less debt will attract more buyers.

Market situation

The market situation should be taken into consideration while making an exit plan. If the market condition is good, there must be a lot of potential buyers and you can sell your company at a higher rate.

Adopt the Right Strategy and Timeline

There are many strategies to adopt, you need to choose the one that will work for you. Select the time when you are prepared for the transition.

If you do not want to sell a 100% share of the company, it is advised to adopt an IPO strategy. Through this strategy, you can stay connected with your business. IPO helps you to sell a portion of your shares.

Likewise, choose a time when you are prepared to sell your company.

Business Evaluation

Business evaluation is another crucial step. Business evaluation gives you an idea about the value of your business. After making the finance report, you can easily examine your company.

You can not put your business for sale without a proper idea about the value.

Bonus Tip : Know the worth of your small business by using our business evaluation calculator .

Speak with your Investors

Once you are clear on what you want to do with your business, take your investors and stakeholders in confidence.

Tell them how the investors’ share will be repaid. You’ll need your business finance report to convince investors of your claims.

Choose new Leadership

Starting with choosing new leadership for your business as you continue with the exit business plan.

You can transfer responsibilities to new leadership smoothly if your business operations are already documented.

Tell your Employees

Your employees have an emotional attachment to the company. Tell them about your business exit plan. Face them with empathy and be transparent in your answers. This will make them feel valued and increase their loyalty to the business.

Inform your Customers

Announce the changes in your business to your customers. Introduce them to the new business owners to keep their confidence.

In case of liquidation or bankruptcy, educate your customers about alternative businesses that offer the same or similar products or services as you did.

What Is the Best Exit Plan?

The best exit plan is the one that gives you maximum profit. A plan that is according to your expectations and goal is best for your business.

The best strategy is the one that keeps on updating as per your need.

In the beginning, you may want to merge your company with another corporation for better results. Later on, one of your close relatives wants to buy your company. His offer might be tempting. You change your mind and are ready to sell.

The best plan is always an updated plan. You can make their exit plans themselves according to their goals. Consult a professional if you feel stuck in the process.

Still Not Sure? Get Professional Help with Exit Business Planning

Contact WiseBusinessPlans Business Exit Strategy Cosultation and make a graceful business exit.

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I exited from my first business and didn’t know these strategies before. I suffered from huge financial damage. As I know now, I will definitely keep all this in my mind.

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What is an exit plan (and why every business owner needs one).

Erik Sullivan

Sellers Seller Articles Seller FAQ

As a business owner, one of the last things you usually want to think about is parting ways from your company. Preparing to say goodbye to it can feel like losing a part of you. 

And for many, planning to sell what is often your largest asset is frightening. It means looking at reality - and for many, this is a difficult step.  

However, the alternative is much more frightening. With no exit plan, you risk falling short of your family’s long-term goals and aspirations.  

- Suhail Doshi, chief executive officer, Mixpanel

At MidStreet, we have counseled many business owners through creating an exit plan for their business. 

In this post, we will cover what exit planning is, what is involved, why you should do it, the components of an exit plan, and who can help you create one. By knowing these key details, you will begin to understand how an exit plan fits into your life and sets up a successful future for you and your family.

Let’s begin. 

What is Exit Planning?

At its most basic level, an exit plan defines your current state , establishes your goals and timeframe for selling , and sets a roadmap to get you from where you are to where you want to be in that timeframe .

At a minimum, you should try to plan your exit from your business a year in advance. For best results, you should start 3-5 years in advance.

Exit plans will vary in complexity and time frame. Some exit plans include 2/5/10 year business and personal goals, financial projections, a summary of the owner’s tax consequences, estate planning, and specific key performance indicators (KPIs) that must be achieved to meet those goals. Others might just be a statement of the business’s current value, a goal value, an exit date, and a rough idea of what financial performance the business needs to achieve that value.

Exit planning doesn’t have to be time-consuming and complex. It is mainly about learning how businesses are priced, thinking about your future, and understanding the small changes you can make to reach your goals. 

Being detailed and thorough for some will be a necessity, but in the great words from Brian Tracy’s Goals!: How to Get Everything You Want Faster Than You Ever Thought Possible :

- Brian Tracy

Why You Should Exit Plan

You only get one shot to sell this business. You may sell multiple businesses in your life - but you only have one chance to sell this one. 

The consequences of the sale will impact your financial future, reputation in the community, relationships with employees, and several aspects of your daily life. 

By creating a plan early on, you will be financially and emotionally prepared for your next endeavor after you sell, whether that be retirement or another business opportunity. 

Exit planning makes these details more certain because it: 

Almost any problem can be solved if you identify it early enough. By not planning ahead of time, you are risking your ability to sell in the future.

- John C. Maxwell

What is The Process of Exit Planning?

The process of exit planning is broken down into three major steps: 

Step 1: Establish where you are

Step 2: Establish where you want to go (timeline, financial, etc.)

Step 3: Make a plan to get there

The best place to start your exit plan is with your wealth advisor, business intermediary, and CPA.

First, sit down with a trusted M&A advisor and perform a business valuation. Once you have a valuation, consult with your CPA and discuss the tax consequences of your sale. Finally, meet with your wealth advisor, share the findings of your CPA and M&A advisor, and discuss your personal goals for the future.

Then, determine with your advisor's assistance how far off your goals you currently are, and make a plan to reach those goals.

What Are The Key Components of an Exit Plan?

There are six main components of an exit plan: 

1. Business Valuation

This is the most critical component of the entire exit plan. Without an idea of how your business is priced and where it’s at today, you won’t be able to effectively make changes to get where you want to go. 

Want to figure out the value of your business? Speak to us about getting a free valuation today. 

2. Summary on The Current State of The Business  

In the summary of the current state of your business, you will include things like: 

These are just a few examples, but the details included will differ based on your type of business and how it is structured.  Be as honest as possible about where things are at today, so you can clearly set goals for what is important. 

3. Personal Goal Statement  

Your personal goal statement will consist of business, family, estate, and personal goals. You will frame the statement of your goals as it relates to the sale of your company and when you would realistically want to sell. 

You should consider things like “When do I want to sell?” and “What do I want my life to look like as it relates to the business and the eventual sale of it?” 

As for writing the goals, there are several different methods you can select - we prefer the teachings from Brian Tracy’s Goals! How to Get Everything You Want - Faster Than You Ever Thought Possible.

4. Factors Driving the Value of the Company  

Once you have a business valuation done, make sure you understand what is driving the value of your company. Ask questions if something doesn’t seem clear, and learn what factors can make your business more marketable when the time comes to sell. 

In your exit plan, name the factors that are driving the company’s value, and set your action plan around maximizing these factors.  

5. Create an Action Plan  

Once you have identified your goals, you need to create your action plan to achieve them.

Let’s say your goal is to pass the business down to your daughter in 5 years. An example of your action plan could be:

Action Plan: This year I will promote my daughter to operations manager and pair her with an experienced leadership coach who is familiar with our industry to hone her leadership skills. 

Based on your specific goals, your merger and acquisition (M&A) advisor or exit planning advisor will be able to assist you in thinking through this action plan.

6. Review Your Exit Plan on a Regular Basis  

How regular? Most wisdom on goal setting and achievement would say every day if you’re serious about achieving them. Or in Les Brown’s opinion:

- Les Brown

However, goals are only one part of your exit plan. We would recommend reviewing the entire plan at least once a quarter, but keep your eye on the goals you are looking to achieve with your plan. 

Who Can Help You Plan Your Exit? 

There are six types of people that can help you create an exit plan for your business: 

You are the only person who can initiate the exit plan - which is why so many owners fail to exit plan. Do not think you can just hire someone to do this for you. 

You can take the free exit planning sheet we put together, get a valuation , and you will be 80% of the way there. 

2. CPA 

Depending on how your business is structured, you may need to speak to a CPA about restructuring your corporate entity. Business owners with C-corps can face double taxation if they sell their business in an asset sale.

Even if you do not need to change the corporate structure of your business, you should still consider consulting a CPA to discuss if you may need to change the way you are reporting your income. They can help your clean up your balance sheet to correctly show what you are earning. 

3. Attorney 

An attorney can speak to you about what you may want to change before the sale of your business. For instance, you may want to move assets around that your current corporation owns. 

If you own real estate not related to the business, in the business entity you are selling, an attorney can help you transfer those assets out of the current one into a different one prior to selling. This is important to do before you go to sell. 

4. M&A Advisor

Your M&A advisor can help you see things from a 10,000-foot view to understand what you need to do to prepare to sell. They can bring up common issues you may face when you go to sell based on your individual company characteristics. 

They will also walk you through your business valuation and explain how your business is valued and how the current market would price it. 

5. Wealth Manager

A wealth manager can help you figure out what your financial picture looks like, what you can do with your money, what you need to retire. 

By knowing these figures, you will be able to plan out your financial future and further structure your exit plan to achieve your financial goals. 

6. Exit Planning Advisor

An exit planning advisor can help keep you on track with your plan from start to finish. Since they specialize in helping business owners exit their business, they will be able to clear up any questions you have about the exit planning process.    

Create an Exit Plan to Sell on Your Terms

Exit planning is a process that will help you remove the uncertainty from the future sale of your business. By knowing what an exit plan is, what it is composed of, and who can help you create one, you can get started on successfully planning your exit. 

Preparing your exit plan can be an emotionally daunting task, just like deciding to sell your business. Learn more about the emotions that may arise by reading “ The Emotions of Selling a Business .” 

We have helped many business owners prepare for their exit ahead of time so that they could sell their business successfully. If you are thinking about planning your exit from your business, give us a call today. 


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Center for Private Company Excellence

12 Exit Planning Considerations for Private Company Business Owners

Mark G. Metzler, CPA, CGMA, CEPA

Director, Audit & Accounting

Center for Private Company Excellence Specialist

10 Tips for Making the Most of Strategic Planning Meetings

Exit planning is a crucial process for private company business owners who are looking to transition out of their businesses. It involves developing a comprehensive strategy to maximize the value of the business and ensure a smooth transition for the owner.

Here are twelve key considerations for exit planning:

Remember, exit planning is a highly personalized and emotional process. Consider working closely with professionals who can tailor the strategy to your specific circumstances and goals. Leverage the expertise of those who have been through the process to ensure a successful exit.

Mark G. Metzler

Mark G. Metzler is a Director with Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email .  

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How to Plan Your Exit Strategy

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Candice Landau

8 min. read

Updated March 8, 2023

Male entrepreneur leaning up against his truck while staring out into the distance smiling. Thinking about how he'll exit his business.

Many people start businesses with the goal of seeking acquisition. But others decide later that it’s time to move on—they’d like to pull their time and money out of a particular venture. It’s never too early (or too late) to start planning your exit strategy.

On this page

What is the purpose of an exit strategy?

Who needs an exit strategy, should i include my exit strategy in my business plan, what type of exit strategy is right for my business, planning for the future.

An exit strategy is how entrepreneurs (founders) and investors that have invested large sums of money in  startup companies  transfer ownership of their business to a third party. It’s how investors get a return on the money they invested in the business.

Common exit strategies include being acquired by another company, the sale of equity, or a management or employee buyout.

For anyone seeking  venture capital funding  or  angel investment , having a clear exit strategy is essential.

Even if you’re a small business, it’s a good idea to plan ahead and think about how you will transfer ownership of the business down the line, whether you choose to sell the business, or try to scale it and seek to be acquired. It’s never too early to plan.

Including your exit strategy in  your business plan  and in  your pitch  is especially important for startups that are asking for funding from angel investors or venture capitalists for funds to grow and scale.

Most of the time, small businesses don’t need to worry as much about it because they probably won’t seek investment (not all good businesses are good investments for angels and VCs). The small business founder’s goal might be to own the business themselves for the foreseeable future.

This list should give you an idea of common types of exit strategies. The type of strategy you adopt will depend on what type of company you are and your financial and strategic goals.

Here are some of the most common:

Acquisition, initial public offering (ipo), management buyout, family succession, liquidation.

The acquisition is often known as a “merger and acquisition.” This is because, when a company decides to sell itself to another company, the buyer will often incorporate or merge the services of that company into their own product or service offerings.

This happened when Google bought YouTube, seamlessly integrating the video platform into their own search product. Now, when you google a topic, you will often notice that videos appear on your search result page.

On a smaller scale, it might happen when a coffee chain decides to buy a bakery business so that they can add a line of pastries and tarts to their menu. An acquisition or merger can be an appropriate approach for businesses of all sizes, including startups.

The best thing about an acquisition is that if you get “strategic alignment” right, you stand to sell the company for more than it may actually be worth. And, if there are multiple companies interested in your product, you may be able to raise the price further or begin a bidding war!

Reasons an outside company might seek to acquire or merge with another company range from allowing them to break into a new market, to giving them a competitive edge, or a strong built-in customer base. Or they might be interested in eliminating you as a competitor from the current market.

If you know that being acquired is your exit strategy right from the start, this gives you room to make yourself appear attractive to the companies who may be interested in purchasing you. That said, remember that those particular companies may decide not to purchase you or may never have been interested in doing so. If you do go down the road of creating a very niche product only one specific company will be interested in, you also stand to lose big time if they don’t take the bait.

This exit strategy is right for a small number of startups and larger corporations, but is not suited to most small businesses, primarily because it means convincing both investors and Wall Street analysts that stock in your business will be worth something to the general public.

For smaller companies that have already begun expanding—like  restaurants that have franchised —an IPO may be a good way for the owner to recoup money spent, though it is worth noting that he or she may not be allowed to sell stock until the  lock-up period  has passed.

A couple of well-known examples of restaurants on the stock exchange include  Buffalo Wild Wings  and  BJ’s .

If you think this is the right strategy for you, or you want to at least have the option of going public later, the easiest way to get listed is to seek investors that have done it before with other companies. They will know the ins and outs and be able to better prepare you for the process.

Speaking of the process—it’s long and hard. If you do succeed in winning over the hearts and data-centric minds of Wall Street analysts, you’ve still got to conform to the standards set by the  Sarbanes-Oxley Act , you will have underwriting fees you’ll need to pay, a potential “lock-up period” preventing you from selling your shares, and of course, the risk of seeing the stock market crash.

While an IPO may be a suitable route for a company like Twitter or Macy’s, consider whether or not you want to weather the headache of tailoring business decisions to the market and to what analysts believe will do well.

Start your plan

If you’ve built a business whose legacy you want to see continued long after you’re gone, you may want to consider turning to your employees.

That’s right—not only will they have a good idea of how things are run already, but they will have intimate knowledge regarding company culture, corporate goals, and a pre-existing determination to make it work.

There’s also the added bonus that you’ll have to do a lot less due diligence. Having management or employees buy your business is a good idea if legacy matters most to you. Of course, you could always consider passing the business on to family, but there’s always the risk there that they won’t understand the business, won’t have the determination to make it succeed, and if you’re splitting the business between family members, the possibility of family rivalry.

On that note, if your family has been brought up with an intimate knowledge and understanding of your business, they may well be the best people to pass things on to.

In fact, this is exactly what happened at Palo Alto Software. Founded by Tim Berry in 1988, his daughter Sabrina Parsons was made CEO and her husband Noah the COO shortly before the recession hit.

The decision was strategic and allowed Tim to pursue other interests, including putting a focus on  writing . Since then, Sabrina and Noah have adapted the flagship desktop-based business planning product,  Business Plan Pro , into a SaaS tool called  LivePlan .

Passing Palo Alto Software on to family was more fortuitous than carefully planned. Tim had always  encouraged his children  to follow their own path. In fact, none of them got degrees in business. It just so happened that Sabrina and Noah had entered the internet world early in their careers and gained the experience necessary to join and build out Palo Alto Software’s product offerings.

If you are considering passing your business on to your children or other family members, there are a number of things worth thinking about and planning for, including ensuring that whoever is set to take over the business has the relevant skill set, is competent, and is committed to the future and success of the business. This will make it a lot easier to retire.

For small businesses, liquidation is a common exit strategy. It’s one of the fastest ways to close a business, and may sometimes be the only option in cases where the operation of the business is dependent solely upon one individual, where family members are not interested in or capable of taking over, and where  bankruptcy  is close at hand.

It’s worth noting though that any profits made from selling assets need to be used to pay creditors first.

To make any money using liquidation as an exit strategy, you’re going to have to have valuable assets you can sell—like land, equipment, and so on.

If it’s not too much hassle and if your decision to liquidate is not related to finances, think instead about selling the business to the public. Are there any ways you can make it appealing?

If this isn’t an option and it’s better to close the doors before you lose money, liquidating your assets may be your best bet.

If you’re putting together your business plan or preparing to pitch to investors for the first time, think through your exit strategy. Make sure your  financials are up to date  and that you’re reviewing them regularly so your  business’s valuation  is accurate.

If your successful exit is tied up in hitting certain financial milestones, don’t hesitate to ask your  strategic business advisor  for some guidance. There are other things you can do to prepare your business for acquisition and other exits— check out this article  for more information.

Content Author: Candice Landau

Candice is a freelance writer, jeweler, and digital marketing hybrid.

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Resources: M&A Encyclopedia

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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:

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

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: 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:

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:

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:

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:

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 options include:

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:

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:

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:

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

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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8 Small Business Exit Strategies: Develop your exit plan

exit plan for small business

Talking about an exit strategy for your small business or startup may seem like you’re expecting the worst to happen. But it simply means you’re preparing a plan for the final phase of your business—cashing out the investments you’ve put in the business.

An exit strategy, also known as an exit plan, is a plan for a time in the future when you decide to leave your business and give up your ownership.

Ideally, you think about an exit strategy before starting your business. Businesses usually create an exit strategy along with their business plan . Your exit plan should address the following questions:

In this article, we’ll see why you should have an exit strategy and the eight common exit strategies to pick from for your small business or startup.

Why Do You Need a Business Exit Strategy?

8 business exit strategies, plan a clean exit with exit strategy.

While a business plan outlines the process of setting up your business and running it, an exit strategy helps you transfer ownership or dissolve your business.

Calling it quits may not be in your mind while starting your business, but there can be situations where exiting may be the best choice. With an exit strategy in place, you can save time and effort, and stay prepared to make the final move when the moment arrives.

A business exit strategy helps:

8 Small Business Exit Strategies

Whether you’re a scrappy new startup or an experienced small business, an exit strategy is a must for all types of businesses.

Here are the eight commonly used small business exit strategies . Make sure to pay attention to the pros and cons of each to help pick the right one for your enterprise.

1. Family Succession

family succession

If you have a family business and want it to continue running after your retirement, this strategy is the right pick for you. In this exit strategy, the ownership is transferred to the son or daughter of the owner (if they’re of legal age) or any other eligible family member.

However, it is essential to pick the right successor, one who is capable of handling the responsibilities of the business. Failing to do so can hinder the growth of the company and hurt the progress made so far.

2. Selling to Your Partners or Investors

Selling to investor

Selling your stake to your partners or investors is another option if you are not willing to sell out your business to an unknown party. This strategy is quite popular since the buyer is someone you already know and trust.

This is only possible when you’re not the sole proprietor of the business.

In this exit strategy, you will sell your share and negotiate a compensation price for your investment of time and money in the business. Depending on the nature of your business, the compensation may vary.

3. Management or Employee Buyout (MBO)

MOB Buyout

If the above two exit strategies are not your cup of tea, you might want to opt for a management buyout (MBO). In this exit strategy, you sell your shares to the employees of the company.

4. Merger and Acquisition (M&A)

Merger & deals

In the M&A exit strategy, you sell your company to or merge it with another company whose business strategies and goals align with yours.

If your competitors want to acquire your company, you can leverage this opportunity to negotiate and sell at high profits.

5. Initial Public Offering (IPO)

File a IPO

Unlike other exit strategies in this list, an IPO is more of a progressive step than an exit. If your business is doing well and you want to attain high profits by selling off your stakes to the public, this is your best bet.

However, this strategy is complex and challenging to implement.

6. Acqui-hiring

Acqui Hiring

Acqui-hiring is similar to the acquisition exit strategy, but the motive to buy the company is to acquire its skilled employees. If you want to sell off your business while ensuring that your employees don’t lose their job, the acqui-hiring exit strategy is a suitable option.

7. Liquidation


If all the previous business exit strategies don’t work, it might be time to liquidate your company. Liquidation refers to the permanent closing of your business by selling off all the assets to pay off debts and other obligations.

Liquidation is a deliberate decision made by the entrepreneur in case they want to wind up the business for any reason. For instance, you might want to dissolve one business to invest its resources in a more profitable one.

8. Declare Bankruptcy

File a Bankruptcy

Declaring bankruptcy is never fun; it’s something that no entrepreneur wants to go through. But when all else has failed, it’s your last resort to dilute your business. Bankruptcy refers to the state of being unable to pay off your business debts.

For most businesses, this is a clear dead-end. But it is possible to recover from bankruptcy . Filing for bankruptcy can be a deliberate decision or an involuntary action you have to take to unburden yourself from your existing obligations.

Plan a Clean Exit with a Business Exit Strategy

Running a business and dealing with risks go hand in hand. The best way to avoid potential roadblocks is by planning well into the future. Create an exit strategy to tackle business failure or stay prepared for an ownership transfer. Compare the above exit strategies to choose the best one for you.

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Business Transition Planning: Designing an Exit Plan

exit plan for small business

Exiting your business without a well thought-out succession plan is like entering a Formula One race without knowledge of the track. You may cross the succession finish line, but without thorough planning, you likely won’t take the checkered flag. 

A well-designed exit plan can facilitate a number of goals — in some cases well in advance of the transition itself. A detailed plan can help:

As with many things in life, it is not uncommon to begin succession planning on one path and end the process on another path. Strategic exit planning can position you and your business for an optimal transition — whether you have a clear goal, are at a crossroads in your business, or you have not yet begun thinking about a succession.

Begin with the Destination

The first step in exit planning is to articulate, understand, and prioritize your goals. The next step is to clarify what it is you seek to accomplish through the business succession planning process. These steps can help you develop your transition plan. 

Exiting Your Business 

There are three common methods of exiting a business: a sale to a third-party buyer, a transfer to employees, and a transfer to family members. Each of these methods involves different considerations and may yield different benefits.

Maximizing Business Valuation

The most common form of business transition is a sale to a third party. One key factor in this type of sale is positioning the business to obtain the highest valuation. A potential buyer will go through a due diligence process that involves examining the business, including its operations, history, property, employees, financials, documentation and legal matters. Working with a team of advisors to understand the factors a buyer may consider and how to address and improve those factors within your company can help to drive the value of your business higher. The following are examples of value drivers a buyer will likely consider:

Having a strong, well-established management team may be an especially desired value driver. Buyers may want to see that there are agreements in place to retain key employees. This can come in the form of employment agreements, non-compete agreements, or compensation arrangements that provide employees with incentives to remain with the company following the transition in ownership.

Controlling Exit Timing

Having a well thought out business succession plan can provide a greater level of control over your continued involvement in the business and the timing of your exit. The succession plan can also gauge your flexibility in terms of other priorities you may have, including retirement, philanthropy and unrelated personal interests.

For example, if your goal is to remove yourself from active management and employment in the business immediately upon completion of the transfer, having a strong management team in place can help facilitate your exit. Otherwise, a third-party buyer may require you to remain involved with the company for a period of time under an employment contract or independent contractor agreement. 

Steps such as organizing the business financials, locating and updating relevant organizational documents, and conducting necessary maintenance on equipment and property can mean the difference between exiting the company in a timeframe close to your choosing or having to push your exit back a number of years.

Alternatively, if you transfer the business to family or employees, you may want to reserve the right to step back into the business. Such a provision in the sale agreement is often referred to as a buy-back right. Including such a right may provide a comfort level which allows you to transition out of the business when you want, knowing you could return to an ownership position if needed. Buy-back rights can help to protect the seller’s financial interest in the ongoing success of the business. 

Reducing Post-Sale Litigation Risk

Business owners often accept a level of risk in order to pursue financial rewards. It comes with the territory if your goal is to build, grow, and operate a business. Your risk appetite post-sale, however, may be quite different than pre-sale.

How you transition out of business ownership can greatly affect your post-sale litigation risk. This could be a key consideration in determining whether to structure the sale of your business as a stock sale or an asset sale. In a stock sale, the buyer steps into the shoes of the previous owner, allowing the seller to walk away from potential claims and obligations. While an equity sale may be your preference, the buyer may insist upon an asset sale for a variety of reasons, including the industry, potential liabilities and warranty claims. In any event, a clear understanding of the agreement including the covenants, representations, and warranties and their respective applications and limitations is critical to minimizing the risk of adverse claims.

You may wish to transition the business to the employees who have helped you grow the business to what it is today. This may be accomplished through a sale to a group of key management or through selling the business to an Employee Stock Ownership Plan (ESOP).

Creating Opportunities for Key Management

One advantage of a key management buyout is that the buyers will be intimately familiar with business operations and financials, which can make the due diligence process less onerous. They would presumably also remain in their current roles. This would provide a level of stability for customers, suppliers, and other employees and increase the likelihood of continuing business success.

Key management is unlikely to have the funds necessary to acquire the business in a cash sale. Typically such a sale will require the management group to finance the buyout by taking on debt. The terms of the sale will also most likely involve an installment sale with payments paid out over a period of years, underscoring the need to work toward the future success of the business. As noted above, this could affect the timing of your exit.

Creating Employee Incentives

You may wish for all employees to benefit rather than just a few key employees. If this is the case, an ESOP may be a viable alternative. An ESOP is a qualified retirement plan uniquely designed to invest primarily in the stock of the sponsoring company. The plan is also permitted to borrow funds, enabling it to acquire the stock. As participants in the ESOP, employees of the business benefit from the growth in company stock, providing a financial incentive linked to company success.

Selling a business to an ESOP may provide a number of tax advantages and provides a means for liquidating the business expeditiously. An ESOP is also a potential alternative for owners who do not intend to transfer the business to family members and have limited options for selling to a third party.

Keeping the Business in the Family

If your goal is to keep the business in the family, gifting (rather than selling) all or a portion of the business may be an option. Two key factors in making this decision are the federal gift tax (currently levied at a rate of 40%) and your own personal cash flow needs after the transition. The Tax Cuts and Jobs Act of 2017 increased the gift and estate tax exclusion amount and adjusts that amount each year for inflation. For 2023 the gift tax exclusion amount is $12.92 million ($25.84 million for a married couple). Under current law, the exclusion amount is scheduled to be approximately halved in 2026, also indexed for inflation. This temporary increase in the gift tax exclusion amount provides a window of opportunity to make lifetime gifts of a family business interest while potentially avoiding gift tax. 

Factors such as the desire, experience, and aptitude of the family members to run the business should also be considered as early in the process as possible.

Bringing children or other family members into the business gradually so they can learn the ropes and prepare themselves for leadership is a best practice. One strategy to accomplish this is to transfer nonvoting interests in the business first, while retaining voting interests and control until the younger generation gains experience and proves itself. Such transfers reduce exposure to estate tax by effectively transferring the future appreciation of the business to the next generation. 

Developing an Effective Retirement Plan

It is important to work with your financial advisors to determine how much of the business you can afford to gift without jeopardizing your desired post-exit lifestyle. Providing for the financial needs of the business owner is a fundamental component of good planning.

Avoiding Family Conflict

Parents may consider transferring equal ownership to all their children, regardless of their involvement in the business. But the potential for conflict among active and non-active children can be substantial. For example, if there is a year when the business needs to retain profits to pursue a business opportunity, the children who are not active in the business but have grown accustomed to receiving dividends may be at odds with their siblings who are active in the business. It may be better to avoid giving ownership interests to children who are not actively participating in the business. 

A potential solution when multiple children are involved, some active and some not, is to separate the real property from the business. This would allow the business owner to gift or sell the real property to the non-active child and gift or sell the business to the active child. Prior to the gift or sale, the business could enter into a long-term lease agreement to avoid conflict between siblings after the transfers. 

If your intention is to retain ownership of the business and pass it on to your children at death, consider passing the business to children who are active in the business and equalizing non-active children with other assets. One simple way to accomplish equalization is to purchase life insurance and designate the children not active in the business as the beneficiaries.

Fulfilling Your Philanthropic Goals

When a business owner starts down the path of succession planning, it is important to do so in a comprehensive manner that considers financial goals beyond transitioning out of the business. In some cases, your exit strategy may accomplish multiple objectives. There may be opportunities to achieve your business succession goals and philanthropic goals all in one transaction. 

Instead of selling the business directly to the buyer, the ownership interest may be contributed to a specially designed split interest charitable trust that provides income to the donor and a remainder interest to a named charitable organization. This will provide the business owner/donor with an income stream, a charitable income tax deduction, and the deferral of capital gain. The buyer can purchase the business interest from the trust. At the termination of the trust, the remainder in the trust will be transferred to charitable organizations designated by the donor. This strategy is not available to S corporations [1] and is most appropriate for those who need the income and have a charitable intent. In order to obtain the tax benefits mentioned, there may be no preexisting obligation for the trust to sell the business interest to the buyer.

Business succession planning can be a complicated and involved process. Achieving your business, family, and personal goals requires balancing various priorities that might be in conflict.

However, through deliberate planning that incorporates your unique goals, needs, and characteristics, you can achieve your optimal result.

For more information, please consult your PNC Advisor or  contact PNC Private Bank .

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Important Legal Disclosures and Information

1. S corporations are those that pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. See www.irs.gov/businesses/small-businesses-self-employed/s-corporations (last accessed October 29, 2022).

The material presented herein is of a general nature and does not constitute the provision by PNC of investment, legal, tax, or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions expressed herein are subject to change without notice. The information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy. You should seek the advice of an investment professional to tailor a financial plan to your particular needs. For more information, please contact PNC at 1-888-762-6226.

The PNC Financial Services Group, Inc. (“PNC”) uses the marketing name PNC Private Bank℠ to provide investment consulting and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds to individual clients through PNC Bank, National Association (“PNC Bank”), which is a Member FDIC , and to provide specific fiduciary and agency services through PNC Delaware Trust Company or PNC Ohio Trust Company. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“PNC Private Bank” is a service mark of The PNC Financial Services Group, Inc.

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Business Exit Strategy: Definition, Examples, Best Types

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

exit plan for small business

What Is a Business Exit Strategy?

A business exit strategy is an entrepreneur's strategic plan to sell his or her ownership in a company to investors or another company. An exit strategy gives a business owner a way to reduce or liquidate his stake in a business and, if the business is successful, make a substantial profit. If the business is not successful, an exit strategy (or "exit plan") enables the entrepreneur to limit losses. An exit strategy may also be used by an investor such as a venture capitalist in order to plan for a cash-out of an investment.

Business exit strategies should not be confused with trading exit strategies used in securities markets.

Key Takeaways

Understanding Business Exit Strategy

Ideally, an entrepreneur will develop an exit strategy in their initial business plan before actually going into business. The choice of exit plan can influence business development decisions. Common types of exit strategies include initial public offerings (IPO) , strategic acquisitions , and management buyouts (MBO) . Which exit strategy an entrepreneur chooses depends on many factors, such as how much control or involvement (if any) they want to retain in the business, whether they want the company to be run in the same way after their departure, or whether they're willing to see it shift, provided they are paid well to sign off.

A strategic acquisition, for example, will relieve the founder of his or her ownership responsibilities, but will also mean the founder is giving up control. IPOs are often seen as the holy grail of exit strategies since they often bring along the greatest prestige and highest payoff. On the other hand, bankruptcy is seen as the least desirable way to exit a business.

A key aspect of an exit strategy is business valuation , and there are specialists that can help business owners (and buyers) examine a company's financials to determine a fair value. There are also transition managers whose role is to assist sellers with their business exit strategies.

Business Exit Strategy and Liquidity

Different business exit strategies also offer business owners different levels of liquidity . Selling ownership through a strategic acquisition, for example, can offer the greatest amount of liquidity in the shortest time frame, depending on how the acquisition is structured. The appeal of a given exit strategy will depend on market conditions, as well; for example, an IPO may not be the best exit strategy during a recession, and a management buyout may not be attractive to a buyer when interest rates are high.

While an IPO will almost always be a lucrative prospect for company founders and seed investors, these shares can be extremely volatile and risky for ordinary investors who will be buying their shares from the early investors.

Business Exit Strategy: Which Is Best?

The best type of exit strategy also depends on business type and size. A partner in a medical office might benefit by selling to one of the other existing partners, while a sole proprietor’s ideal exit strategy might simply be to make as much money as possible, then close down the business. If the company has multiple founders, or if there are substantial shareholders in addition to the founders, these other parties’ interests must be factored into the choice of an exit strategy as well.

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exit plan for small business

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

exit plan for small business

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.

exit plan for small business

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 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

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:

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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exit plan for small business

Here’s Why An Exit Plan is as Important as a Business Plan

business exit plan

It’s no secret that a strong business plan is vital to the success of a business. When creating a business plan, most people consider capital, workforce, inventory, cash flow, and profit. But, these factors aren’t enough. A well thought out exit plan is also vital.

Many business owners are ready to turn over the daily responsibilities of running and managing their business, but only a few make the necessary preparations to ensure their business will be left in good hands while securing a legacy as well as financial freedom. This type of readiness comes from the creation of a robust exit plan.

Table of Contents

What Exactly is Exit Planning?

An exit plan is an extensive road map that provides solutions to all of the personal, business, financial, value creation, and tax issues involved in transitioning a business.

An exit plan should be documented in writing and must give business owners a specific strategy to help them depart from their business. This will include how and when they choose to maximize their business and personal objectives.

Key factors why exit planning is essential

Many question the importance of having an exit plan in making up a good business. A business plan is a guide for business owners to successfully operate and run the business so that it grows and eventually succeeds. But that’s just it.

Once the business plan is implemented, your business will run as it is and will operate without an end goal. However, if you have an exit plan, you’ll direct your business to a guided path, not only to success but also to your personal gain once you decide to exit in the business.

Here are some factors why drafting an exit plan is essential:

What makes up a good exit plan?

When business owners come up with a decision to create an exit plan, it doesn’t happen overnight. It requires thorough planning, brainstorming, documentation, and analysis.

The planning stage is tedious because an effective exit plan will take years of planning, and requires at least five years of hard work before completion.

To create a good exit plan, there are the primary factors that you should consider. Remember, it should be specific, feasible, and realistic.

Exit strategies you need to consider

The intention you have for your business will help you determine what your exit strategy will be.

There are four exit strategies , and each of them offers different benefits that your business can gain.

All four exit strategies are highly dependent on what you want to do with your business. You can choose to apply one strategy to your business if you think it’s the best action. Even liquidation, which might seem like a negative strategy, can be the best choice if your situation calls for it.

A good team can help draft your exit plan

You cannot draft a well-detailed exit plan alone, no matter how much you know about your business. You still need a good team to plan everything. Typically, a business owner has to employ its core team, which consists of a legal business lawyer, a Certified Public Accountant (CPA) who highly specializes in tax, and an exit planner/advisor.

On the other hand, large-scale businesses need to employ a support team consisting of an investment broker, deal lawyer, and a valuation specialist. You need to take in mind that your exit plan will define which of these people you need the most. People in the core team are highly valuable and need to be secured first hand.

When should a business start their exit planning?

After learning how vital exit planning is, one question remains: when?

If you ask a couple of exit planners, you’ll receive various answers to your questions. Others will suggest getting your exit plan drafted as early as possible, or the moment you establish your business.

In simple words, it means NOW!

Some suggest giving yourself and your business at least 2-3 years before you start laying out your exit plan. Financial institutions also recommend to start your exit planning years before the date you propose to exit from the business, say, in five years.

What matters most is never to delay and don’t dismiss the idea of drafting your exit plan , as there is a cost in postponing things regarding business.

A study conducted by UBS showed that 48% of small businesses don’t have formal exit plans which could result in financial loss and liquidation of assets. An exit plan aims to prevent this from happening.

Many business owners tend to only focus on how to operate their business, neglecting the idea to plan for a business exit. Exit planning is a valuable component in a business plan, and a well-detailed one is vital for business owners who want a practical guide for their business’ fruitful end. However, it is worth noting that an exit plan is time-consuming. Therefore, it shouldn’t be rushed. If so, it will be under duress and can lead to failure.

Author’s bio:

Lauren Cordell is a full-time writer with vast expertise on topics related to business and finance. Her blog revolves around helping new business owners find their way to success. She dedicates herself to spreading the right knowledge when it comes to business management and financial literacy.

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Politics latest: pm announces uk will host first global summit on ai safety ahead of white house talks with biden.

The summit, which will be held in the autumn, will consider the need for international co-ordinated action to mitigate the risks of the emerging technology. The prime minister's announcement comes on a two-day working trip to Washington DC.

Thursday 8 June 2023 07:05, UK

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Boris and Carrie Johnson have been accused of hosting a friend who was allegedly helping to plan their wedding at Chequers when COVID restrictions were still in place.

A report in the Guardian claims Dixie Maloney stayed overnight at the ex-prime minister's grace-and-favour countryside home on 7 May 2021.

At this time, indoor gatherings between different households were banned except when "reasonably necessary" for work or childcare purposes.

The newspaper reports Ms Maloney was helping to plan the Johnsons' wedding, which took place in Downing Street three weeks later.

A spokesperson for Ms Maloney told the Guardian that she would not have attended Chequers had she thought it was unlawful.

"She would not have done anything at the relevant time unless she honestly believed that it was lawful to do so."

The spokesperson added that Ms Maloney was never "formally engaged to work for either Boris or Carrie Johnson".

In a statement, Mr Johnson's spokesman told Sky News: "This was entirely lawful, and it was covered by relevant provisions in the COVID regulations, as the Guardian's report makes clear. 

"To suggest otherwise is totally untrue."

Former Green Party leader Caroline Lucas has announced that she will stand down as an MP at the next election.

In a letter sent to her Brighton Pavilion constituents, Ms Lucas said it had been the "privilege of my life to serve this extraordinary constituency and community".

Ms Lucas said the "threats to our precious planet" had become "ever more urgent", but that her role in parliament as the Green Party's only MP meant she had "struggled to spend the time I want on these accelerating crises".

"I have therefore decided not to stand again as your MP at the next election," she said.

Members of the public have been urged to share their experiences of how the coronavirus pandemic affected them to help shape the COVID-19 Inquiry's recommendations.

Every Story Matters aims to aid understanding of the full picture of what happened and what more needs to be done to ensure the UK is better prepared in the future.

Almost 6,000 people have already shared their stories.

And dozens of organisations, including homelessness charities and older people's groups, are helping to reach as many people as possible.

Inquiry team members will also be travelling around the UK to hear stories from people in-person at community events.

Inquiry chairwoman Baroness Heather Hallett said: The pandemic   affected every single person in the UK and, in many cases, continues to have a lasting impact on lives. Yet every experience is unique.

"By sharing the personal impact the pandemic had on you, your life and your loved ones, you can help me and the inquiry's legal team to shape my recommendations so that the UK is better prepared in the future."

You can read more from Sky News in the link below:

The prime minister skipped Prime Minister's Questions for the fourth time yesterday - this time, because he is on a two-day working trip to the US.

So far, Mr Sunak has spent time with members of Congress and senators, and conducted interviews with members of the UK media who had travelled with him.

Last night, he attended the Washington Nationals v Arizona Diamondbacks baseball game at Nationals Park in Washington DC.

But the big moment of the trip is yet to come - when Mr Sunak meets with President Joe Biden in the White House.

This will take place later today, and will mark the fourth time the two world leaders have conducted talks in a matter of months.

It is expected Mr Sunak and President Biden will hold a short news conference afterwards - and we'll bring you all the latest right here.

But until then, here's another look at our political editor Beth Rigby's interview with the prime minister in Washington DC:

The UK will host the first global summit on artificial intelligence (AI) safety, Rishi Sunak has announced ahead of talks with US President Joe Biden.

The summit, which will be held in the autumn, will consider the need for international co-ordinated action to mitigate the risks of the emerging technology.

Mr Sunak said: "AI has an incredible potential to transform our lives for the better. But we need to make sure it is developed and used in a way that is safe and secure.

"Time and time again throughout history we have invented paradigm-shifting new technologies and we have harnessed them for the good of humanity. That is what we must do again."

The prime minister's announcement came on a two-day working trip to Washington DC, and hours before Mr Sunak meets with President Biden in the White House today.

It also comes as the Centre for AI Safety warned that "mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war".

Mr Sunak acknowledged the grim forecasts but said he wanted to avoid "scaremongering" about the technology.

"The creators themselves have talked about risks on a scale on parallel with nuclear war and pandemics," he told Sky News.

"And when people hear that they'll rightly be worried about that, but that's why I've actually been bringing the companies together to talk about the right guardrails to put in place to prevent those kinds of things from happening."

Good morning!

Welcome back to the Politics Hub, where we'll bring you all the latest news from the heart of Westminster.

Here's what we have coming up today:

We'll bring you all the latest political news right here.

Prime Minister Rishi Sunak has said that a free trade agreement with the US "has not been a priority for a while" for either country.

He told reporters: "What we're both focused on is making sure that our economic partnership reflects the particular challenges and opportunities of the time that we're in right now. And that is the conversation that I will be having with President Biden. 

"That involves not just trade but also economic security, which is increasingly important. 

"But when it does come to trade, you know, what we have been doing with the US are looking at specific and targeted ways to improve trade between our countries."

Mr Sunak went on to say that the UK already has an "unbelievably strong trading relationship with the US".

"We're the largest investors in each other, we employ over a million people in each others countries."

During his plane journey to the US, Prime Minister Rishi Sunak was pressed by journalists on whether he has ever had a mortgage himself as rates continue to soar.

After being asked three times, he finally revealed he has had a mortgage.

"The most important thing we can do is to halve inflation because that's how we can bring interest rates down over time," Mr Sunak said.

"That's why I have my five priorities. Number one priority is to halve inflation.

"And it's important that - as I've talked about in the past - that government policy is responsible.

"What would be very damaging for people's mortgages and interest rates is if the government was irresponsible with the public finances, was borrowing more than was responsible and that put more upward pressure on interest rates. 

"That is not the right thing to do."

He initially insisted that "my mortgage is not the big focus."

But asked again if he has had a mortgage, he said "yes".

For a prime minister who stands squarely for economic competence, the UK’s persistent inflation, rising interest rates and the risk of recession back home, is not a comfortable place to be at all. 

The Truss mortgage turmoil goes on, with hundreds of mortgage deals pulled from the markets last week, amid expectations interest rates are about to rise again, while the average new two-year fixed mortgage is at 5.72%.

Those two pledges Rishi Sunak made at the beginning of the year - to halve inflation and get the UK economy growing again - are looking hard to achieve. Voters seem to be losing faith in their now PM and former chancellor, with a poll out this week finding over half of Britons believed he was doing a bad job while Sir Keir Starmer’s Labour party now lead the Tories on the economy.  

I asked the prime minister about when the public might hope to see this terrible situation ease and he admitted that it wasn’t easy, that inflation was the priority and, like his Chancellor Jeremy Hunt, he was prepared to risk recession to achieve his target on halve inflation.

He also said it was "absolutely his responsibility to deliver it," and it was on him personally to deliver it and be held accountable: the message from Washington was clear, there will be no buck passing on these pledges. 

He is a PM who likes to only promise what he can deliver, but as the year grinds on, and UK inflation stays sticky what seemed easy in January doesn’t now, putting him under some pressure when he’s already trailing Labour hugely in the polls.

Mr Sunak will want to use this trip to Washington to emphasise strengthening economic ties with the US - although the trade deal promised by the end of 2022 in the Conservative manifesto is off the table, after the US put talks on ice certainly beyond the next election at least.

Mr Sunak is not planning to burn through any facetime with President Biden on this, instead using this trip to try to convince the US President of the virtues of the UK being a more pivotal role in the regulation of artificial intelligence as the US, EU and China take the lead.

The prime minister, who takes personal pride in being knowledgeable on AI, has warned in the past of the existential risk it poses if AI becomes more intelligent than humans, with its creators warning of the threat to human life if AI can be used for cyber attacks or to create bioweapons. 

The chair of the PM’s taskforce warned this week that we might be just two years away from AI being able to "kill many people."

Mr Sunak told me he wasn’t "going to get into this business of scaremongering people because what I think people will say is there’s a new technology which we don’t fully know yet what it’s capable of doing, the creators themselves have talked about risks on a scale unparalleled with nuclear war and pandemics, and when people hear that they’ll rightly be worried about that".

He said this is why he wants to take a lead in talking about the "right guardrails to put in place and to prevent those kinds of things happening." 

His task here in Washington will be to convince President Biden that the UK has a bigger role to play, With such woes at home, he could do with a win here.

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