You are beginning to think of a time beyond business ownership, but you don’t have a clear vision of how to “leave your business in style.” So what do you do? First, understand that leaving your company is a process. Ask yourself if you are approaching your exit in a methodical, logical, rational manner. Most owners do not undertake the necessary thought and planning that underpins good ownership transitions because they don’t know how to begin or exactly what to consider and analyze.
Most owners are unaware that there is a planning and implementation process that can provide that underpinning. This process begins with understanding your exit objectives and the value of your business. Based upon what you want and what you have, you then determine a proper path for you, be it a sale to a third party, a transfer to children, a sale to an ESOP, a sale to a co-owner or an orderly liquidation. As part of this process, you must consider what would happen to the business and to your family in the event your death or disability precedes your planned exit.
To succeed, you need a written plan that sets out your exit objectives, the financial and other factors that need to be considered, as well as one that documents how you are going to achieve those objectives. Along with this, you must have a checklist that assigns responsibility for each task to be completed throughout the exit planning process; sets a date for the task to be completed; and, designates the person responsible for completing that task.
How do you begin? As skilled and as successful as most business owners are, they cannot, working alone, create and execute their exit plans. And, as skilled as is your attorney, CPA, or financial and insurance representative, each is unable to craft a successful exit plan when acting alone. Successful exit planning is a multi-disciplinary effort that requires you and your advisors working together. For your exit plan to succeed, you need legal input, financial input, tax input, financial advisory input, and, often consulting input.