Exit Planning: A Checklist
What kind of "Exit Plan" allows a business owner to leave his/her business in style? And, just how is one created?
Of course, plans vary but, properly crafted, each Exit Plan has several common elements and is the result of a proven step-by-step process. Owners often best grasp these elements, or steps, when framed as questions.
Step 1: Exit Objectives
Have you determined your primary planning objectives in leaving the business, such as:
- Your desired departure date?
- The income you need to achieve financial security?
- The person to whom you want to leave the business?
Step 2: Valuation and Cash Flow
Do you know how much your business is worth? Do you know what the business's future cash flow is likely to be after you leave it?
Step 3: Making the Business More Valuable
Do you know how to increase the value of your ownership interest?
Step 4: Sale to a Third Party
Do you know how to sell your business to a third party in a way that will maximize your cash and minimize your tax liability?
Step 5: Transfer to co-owners or family
Do you know how to transfer your business to family members, co-owners or employees while paying the least possible taxes and enjoying maximum financial security?
Step 6: Business continuity upon death or disability
Have you implemented all necessary steps to ensure that the business continues if you don' t?
Step 7: Wealth Preservation Plan
Have you provided for you family' s security and continuity should you die or become incapacitated?
If you are able to answer "Yes" to all of the above questions, congratulations! You have a solid Exit Plan in place.
However, if you were not able to answer "Yes" to all of the questions, then you may want to learn more about an Exit Planning process. Creating and implementing your Exit Plan may be the most important business and financial event of your life.
