A Graceful Departure

Planning Your Exit and What Comes After

Sixty-five percent of business owners are open to the prospect of selling their businesses.1 And yet, many don’t have a written exit plan. An exit strategy is important for any business owner who plans to leave the company he or she has nurtured and built.

As you develop your exit strategy, you should be concerned not only about a successful departure but also about what you will do afterward.

What’s the Plan?

An exit strategy doesn’t have to be overly complicated, but there are a few important things you should carefully consider.

  • Your planned exit date and the time frame surrounding your departure are important aspects to keep in mind. Training a successor or finding the right buyer may take a significant amount of time.
  • You should also consider how much money you’re likely to need after you leave the business. Will you retire? Start a new business? What costs might you face in the next phase of your life? If the sale of your business won’t be able to provide enough money, how will you make up the difference?
  • How could the structure of the sale affect your tax situation? Consult with your tax advisor to determine tax-efficient ways to structure the sale of your business.
  • Plan for contingencies. An exit plan should account for the possibility that you could become disabled or die before your planned exit date.

Now That You’re Gone

Once you’ve navigated your way successfully out of your business, you will need to consider what to do with your windfall. How will you use it to pursue your financial goals? The guidance of a financial professional can help you determine how to put your wealth to work for you.

The sale of your business might also contribute to the growth of your estate. A larger estate may change the options you have for passing wealth to your heirs. You should consult with your attorney to evaluate your estate options.

There are many considerations involved in a carefully planned exit. By preparing for your departure from the business, you may be able to take advantage of the opportunities that your new life outside the business affords.

1) Inc.com, June 11, 2009

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.
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