Why Develop a Business Succession Or Exit Plan?
As you know, we are business exit planning specialists. We specialize in developing and executing exit plans for private business owners. Often we are asked why a business succession or exit plan is necessary. The answer is simple: (1) You will maximize the value of your business at the time of exit; (2) You will minimize the amount of taxes paid; and, (3) we will ensure you, the business owner, that you will accomplish all of your personal and financial goals in the process.
Our Exit Plan is specifically designed for each individual business owner. The Exit Plan will ask and answer all the business, personal, financial, legal, and tax questions involved in selling your privately owned business.
THE BENEFITS OF EXIT PLANNING FOR BUSINESS OWNERS
A well-designed and implemented exit plan is a powerful and valuable business and personal planning tool. It enables you, the business owner, to:
* Achieve your business and personal goals.
* Facilitate your retirement.
* Control how and when you exit.
* Ensure survival and growth of your business.
* Preserve family harmony.
* Reduce employee and family uncertainty.
* Maximize your company's value in good times and bad.
* Minimize, defer, or eliminate capital gains,estate, and income taxes.
* Have strategic options from which to choose.
On the other hand, the failure to have a well-defined exit plan results in real costs to you as a business owner. Without a comprehensive plan, you, as the business owner, will typically:
*Undervalue your company leaving hard-earned wealth on the table.
* Pay too much in capital gains and estate taxes.
* Lose control over the exit process.
* Fail to realize your personal, financial, or business goals during the exit process.
Remember, venture capitalists who fund start-up companies will not invest in a business unless they believe the founders have a good exit plan. Private equity groups will not buy or invest in a successfull middle-market company without developing a detailed exit plan for themselves prior to investing.
EXIT PLANNING TIMETABLE
The more time a business owner has to design and implement an exit plan the better. In an ideal world, you would develop your exit plan when you start your business. If that hasen't been done, we suggest the exit planning process start, if possible, at least three years before you ultimately want to exit. You figure, preparation of exit plan, including gathering all material information, will take 6 months to 1 year; Implementation of estate and tax planning strategies will take 1 year or more; The investment banking/sales process will take 1 year; And, finally, chances are you will be involved in a post sale transaction period where you will continue to play a role in the company as an employee, consultant, or advisor, and that should take 1 year or more.
If you wish more information about our exit planning strategies, please do not hesitate to call us for an initial consultation and, please see our Advanced Estate Planning Techniques article under our Practice Areas: Business Formations section of this web site.
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