As America’s largest generation approaches retirement age, we are seeing an influx of business owners looking for an exit ramp. Curiously, we are also seeing business owners of younger generations exiting, or planning to exit, earlier. No matter your age or target exit date, having a well-structured exit plan for your business can secure the continuity of your business, while also addressing your own financial security and estate planning objectives.

Early Planning Maximizes Options and Value

Planning in crisis takes options off of the table due to time and situational limitations. Planning early, however, allows more favorable options, time, and opportunities to play out, such as:

1.    Identifying your successor – Who you hand the keys to may not currently work for you, be in the market, or may need some years of coaching and development to be ready for the task. Or perhaps the willing and able buyer is not your ideal successor. Starting early allows you the opportunity to be picky.

2.    Maximizing your value – The value of your business may not be fully realized. Identifying inefficiencies, opportunities for growth, and liabilities weighing down your books early on allows you time to address these issues, ensuring you receive the best possible return on your years of hard work and investment.

3.    Estate and Tax Planning – Some estate and tax planning strategies, such as structured gifts and other asset transfers, must be done over the course of time or far enough in advance in order to take advantage of potential tax savings and asset protection strategies available.

Assemble Your Team and Tools

Securing the necessary tools and surrounding yourself with the right advisors to help inform your decisions along the way is key to any successful exit plan.

1.    Business Valuation – Knowing what your business is worth is key to setting expectations, goals, and the timing for your exit.

2.    Advisor Team – Lawyers, bankers, financial advisors, tax professionals, and even industry experts, each bring essential skills to you that will help with your transition. Working with the right combination of knowledgeable professionals will help you identify, manage, and advise on the complexities of corporate ownership, managing liabilities, identifying areas for growth, and addressing tax implications. Taken together, this interdisciplinary approach will help ensure a successful exit on your terms.

3.    Comprehensive Estate Plan – Even the best exit strategy needs a contingency plan. Or perhaps your exit plan is accomplished by testamentary transfers. In either event, a comprehensive estate plan will address your disability and death in concert with appropriate corporate planning and insurance coverages.