By Nivedita Buzzetta, CBI, CM&AP, CEPA

Exit planning is a strategic process that maximizes transferable value in a business. This process involves a comprehensive evaluation of a business owner’s personal and financial goals and determines how to maximize their business’s value to achieve their goals. Beyond optimizing business value, exit planning also offers protection against the five dreaded Ds: divorce, death, disagreements with stakeholders, disability, and distress. By implementing a risk reduction strategy now, business owners can ensure they can exit their business on their terms at any time. It is vital to start exit planning now to allow ample time for preparation and adjustments.

Key Components of Exit Planning

1. Assemble a Team of Advisors: Work with a business broker, financial planner, accountant/CPA, and attorney to develop a comprehensive strategy.
   
   
2. Set Clear Goals: Define business, personal, and financial goals.
   
   
3. Determine and Maximize Business Value: Determine the current value of the business. Identify weaknesses and strengths and create a plan to address them.  Conduct a thorough assessment of the tangible and intangible assets of the business and implement strategies to mitigate risk and increase value.
   
   
4. Conduct Financial Planning: Develop strategies to meet personal and financial goals.
   
   
5. Evaluate and Choose the Right Exit Strategy: Explore various exit strategies, such as selling to a third party, management buyout, etc.  Select the most suitable exit option based on the business’s unique circumstances and the owner’s goals.
   
   
6. Begin Tax Planning: Implement strategies to minimize tax liabilities after the transfer of the business.
   
   
7. Plan for a Smooth Transition: Prepare the business for a seamless transition and minimize disruptions for employees, customers, and other stakeholders.
   
   
8. Implement and Periodically Review the Strategy: Implement and periodically review the strategy to ensure it aligns with the evolving goals of the business owner.

Exit planning is an essential part of an owner’s business strategy. By starting early and working with a team of advisors, business owners can maximize their business’s value and achieve their personal and financial goals. Whether planning to sell, transfer, or wind down the business, a well-thought-out exit plan is key to maximizing value and reducing the risk of the unknown.

Get started today by contacting Niv Buzzetta, a Certified Exit Planning Advisor at Edison Business Advisors, at 239.596.8776 or [email protected] for a more comprehensive discussion.