Building an exit plan is just not about getting ready to exit your business; it’s about adding value to your company. An exit plan will help you:

Achieve your business and personal goals

  • Being well prepared for your exit will allow you to exit your business on your own terms. Business and personal goals will already be established and linked to your eventual exit which will make meeting them more realistic.

Facilitate your retirement

  • Knowing how much cash flow you will require to retire with your preferred lifestyle helps you understand the value you need to sell your business at. If the value is not high enough, we can help you implement strategies to improve the value of your company.

Control how and when you exit

  • A well designed exit plan helps you understand in advance how the transaction needs to be structured for you to meet your business and personal goals.
  • Thinking about when you want to fully retire is important as third party transactions and succession planning take time.
  • A third party sales generally takes between nine months to a year for a transaction to close along with some time post transaction to transfer knowledge.
  • Similarly, if succession is the ultimate goal there is time involved (Could potentially be more time than third party sale) to transition the business to the successor.
  • By understanding the amount of time it takes for a transaction to occur, a business owner can work backwards to see when they need to start transitioning their business.

Ensure survival and growth of your business

  • Generally, business don’t survive second generation ownership. A well designed exit plan helps business owners:
  • Select a successor and determine if that successor has the knowledge and experience to run their business.
  • Understand if the chosen successor is interested in this role.
  • Understanding these items up front is vital to the succession plan.

Reduce employee and family uncertainty

  • Employees and family members are aware that the business owner is getting older, and the unknown future can be quite daunting.
  • By having a documented exit plan can give employees and family members some clarity of what will happen with the company in the future. Specifically, if the business owner is unable to carry out the transition there is a document outlining the business owner’s wishes.

Maximize company value in good times and bad

  • Value is all about mitigating risk. Exit plans allow business owners to work on their business, and not just in their business. This allows owners to create a solid company that can withstand economic downfalls.

Minimize, defer, or eliminate capital gains, estate and income taxes

  • In the end cash is king. By having an appropriate plan in place helps reduce (eliminate) the amount of tax the business owner will be required to pay, which will increase their wealth and help them meet their business and personal goals.

Questions? Contact Michael Trabert:

Michael Trabert / CPA / CVA / CMAP / CEPA / CM&AA

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