What is an Exit Plan?
That is the multi-million dollar question. As the owner of a closely-held business, you have worked hard most of your adult life to build a successful business. Now the time has come to decide how to exit or transition from your business. This is perhaps the biggest decision you have ever faced, and this is your opportunity to do it right. This is both an important personal event, as well as a financial transaction.
There are so many options to choose from, each having vastly different financial, tax, control, and lifestyle outcomes. How do you exit successfully? By following a proven, step by step Exit Planning process.
Six Steps to a Successful Exit
Step 1: Establishing Owner Objectives
A winning Exit Plan rests on three owner-established goals:
- When do you want to leave?
- How much money you want when you exit?
- Whom you want to transfer your business to?
These answers form the foundation of your Exit Plan.
Step 2: Establishing Business Value
Step 1 establishes what you want or need in order to leave your business profitably. Step 2 determines what you have - how much is your business worth? Whether you're selling to an outside third party, a family member, key employee or co-owner, determining its value is a critical component.
Step 3: Enhancing Value
What features, or characteristics, are necessary to make your business even more sellable and valuable? These features - value drivers - either reduce the risk associated with owning the business or enhance the prospects that the business will grow significantly in the future. Our goal is to help maximize your value.
Step 4: Sale to a Third Party
If your desire is to sell to a third party, our goal is to help you do so for top dollar, net after taxes, and on the best possible terms.
If your desire is to sell to insiders such as employees, structure and financing are key. There are ways to protect yourself and to finance a successful sale to insiders who often lack sufficient cash.
Step 5: Developing a Contingency Plan for your Business
If you die or become disabled before your exit is complete, your dream of financial security will become unattainable. Therefore, a contingency plan is critical to help protect yourself and your family.
Step 6: Wealth Preservation Planning
The sale of a business generates cash. Cash for you, your family and the IRS. Learn how to help minimize the IRS's share. Also, how to invest properly and protect your wealth from gift, estate, and generation transfer taxes.
Benefits of Exit Planning for the Business Owner
A well-constructed and executed Exit Plan enables you to:
- Achieve your business and personal vision for your future
- Control how and when you exit your business
- Minimize taxes due on transfer
- Minimize disruption to ongoing operations
- Reduce key employee and customer uncertainty
- Maximize business value