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	Selling a Business
	Exit Planning
	Improving Profitability & Quality of Life
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What is an Exit Plan and Why Do You Need One?

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A comprehensive exit plan is actually a series of constantly evolving plans that will help you address the following critical questions:

• What are your preferred option(s) and timing for exiting the business (e.g., sale to outsider, transfer to family or employees, merger with competitor, liquidation, etc.)
• What are your financial objectives and retirement plans?
• What is the value of your business now?
• What key actions are necessary to increase business value and position it for sale at the price needed to achieve your financial objectives?
• What actions and agreements are necessary to manage estate, trust and tax issues you will face through retirement and beyond?
• What actions, plans and agreements are necessary to ensure continuity of the business in the event of departure, death, or incapacitation of any of the owners or key executives? ( e.g., training programs, system development, buy/sell agreement, key man insurance, non compete agreements)
• Who will replace your or other owners or other key executives upon departure?  Are any current executives capable of doing so, and if so what additional skills, training, licensing, etc. are needed?  If not, what is the strategy for recruiting and developing a replacement?  I.e., what is the succession plan?
• What changes in the business and your role are needed now to preserve your passion for the business and improve your quality of life?

Why an exit plan is needed
In our experience, fewer than five percent of business owners have any kind of written exit plan.  As the cliché goes, a failure to plan is a plan to fail.  In fact, the majority of businesses end in one of the following three ways:

• Owner closes the doors and walks away
• Liquidation
• Bankruptcy.

Why such an inglorious end? A primary reason is a decline in value during the owner’s final years or months in the business.  Sometimes the decline is slow, caused by owner burn out and neglected of the business.  In other cases the deterioration is sudden, brought on by a health crisis, divorce or partnership dispute, departure of a partner or key employee, recession or emergence of stiffer competition. 

Even if the worse case fates above are avoided and the business is sold, more often than not the owner receives less money than needed to achieve retirement objectives and/or the value and performance of the business declines significantly after the sale.  In such situations, the owner usually works well passed the desired retirement date to compensate for insufficient savings and lack of transferable business value.

A comprehensive exit plan will prevent the slow decline by burn out scenario by ensuring the business and the owner’s role is restructured to maintain the owner’s interest and continue business growth, and develop contingency plans to mitigate the impact of various possible urgent crises that could befall the business.