If you are like most people, we know that planning is not something you like to do. In fact, planning probably comes after "cleaning the gutters" on your to do list. However, the fact is that everyone will exit their business at some point and about 70% of business owners will exit their business in the next 10 years because of the retiring Baby Boomer population. A well-executed exit plan will be one of the most effective ways to differentiate your business to achieve top dollar and reduce taxes (even if you are transferring to family).

A thorough exit plan addresses the following questions:

1. When is the right time for me to sell or transfer the company?
2. How much do I need to meet my retirement plans or next venture?
3. To whom do you want to sell/transfer the business?
4. How can I minimize the amount of tax I would pay on the transaction?
5. What should I be doing to increase value and make my company the most attractive? To a financial buyer? To a strategic buyer?
6. Who would run the company if you were immediately unable to run the business?

While you may think that the above answers are simple, there is a lot more detail that need to be worked out on paper and communicated to family and possible key management.

While exit planning is more effective if you have good experience in developing them, it isn’t rocket science and you may be able to find enough information and a template online to do one yourself. In fact, our library section has a wealth of knowledge on exit planning that can provide you with various examples and solutions that could be components of your exit plan. Just keep in mind that there is not a one-size-fits-all strategy when it comes to exit planning. Each CEO and/or shareholders' needs and wishes are different and change along the way. Another problem with performing your own exit plan is that you have to speak with family and possibly other shareholders, partners, or management about depressing and possibly confrontational issues. For this reason, “home-made” exit plans are filled with emotion and bias, and they lack completeness and thoroughness making them ineffective. Finally, implementation of any exit plan generally requires estate planning attorneys, CPAs, wealth advisors and inefficienies from a lack of experience in coordinating between all of these professionals may cost you even more in fees.

Still don’t think that an exit plan is right for you? The best proof is to find a friend that may have sold their business and ask them if there were things that they wish they had done prior to the sale that would have 1) reduced their taxes, 2) brought more buyers to the table, 3) increased the selling price.

In summary, whether you call it an exit plan, pre-acquisition planning, a component of your estate plan ( if you know you want to transfer to family), planning is the key to obtain the best terms for you and your family. While you might be able to do it on your own, consider Orion's Exit Planning Service because our experience, ability, professional connections and emotional detachment will provide you with the most thorough advice and comprehensive plan possible.