Business Exit Checklist

Is Your Business Prepared for Your Exit? Creating a Business Exit Plan is rarely something that we think about in the day-to-day rush of our businesses. However, someday, the day will come when someone else will take the reins. Below, we have a few questions you should ask yourself if you haven’t yet thought about the day you’ll exit your business.

Do you know how much money you need for the rest of your life?

A financial planning professional can put a number on “your number”. Make sure you can get it. Have you developed a management team and business organization that is capable of running the business in your absence? In other words, have you structured your business as an investment? You need to make your business more than just “you”.

Have you maximized the value of your business?

How do you know if you have? Do you have a written strategic business plan or is it all in your head? A failure to plan is a plan to fail, it is said. A good plan does not have to be lengthy but a written plan will be invaluable in defining and achieving your goals. It has to be a “living” plan, not one that just dies on your shelf.

Have you had a formal valuation of your business?

Business owners often use a “rule of thumb”, or the IRS value for estate taxation as their business value. A reality check is important and it is worth getting a formal valuation.

Have you identified whether you will sell your business to an outsider, insider or give or leave it to a family member?

While organizing your business for maximum value is necessary for any exit strategy, specific actions are necessary to make a smooth transition, especially if the sale is to a family member.

Do you have a post exit “Lifestyle Plan”?

Often business sellers are selling for the wrong reason and then want to buy back in to a business owning situation. Make sure your motives for selling are clear and what you will do next so the boredom does not destroy your happiness or motivate you to buy a new business just to stay busy.

Do you have a pre-exit contingency plan to mitigate any dangers your exit plan may face?

A loss of key customers, employees or managers will derail your plan. Proper planning and insurance can help mitigate these dangers.

Have you done your tax and estate planning to mitigate the taxes your exit will generate?

Often business sellers wait until they have a buyer and then ask about how to save on income and estate taxes. Most strategies for saving taxes take at least a year and as much as 3 or more years. The time for restructuring your business is well in advance of your anticipated sale date.

Have you put together your exit planning team and designated a Quarterback for your team?

This may include your lawyer, accountant, M&A advisor, insurance professional and financial and/or business consultant. Do they have the specialized experience beyond your day-to-day needs to accomplish your goals?
If you haven’t thought thoroughly about each of these questions, I recommend you do so now. Schedule some time with your lawyer/accountant/financial planner until you are comfortable with the answers. If you would like assistance in creating your business exit plan, please contact me, Edward Rosenfeld, directly. I’d be happy to hear from you.