What is Exit Planning?
Since we are going to spend a lot of page space this month talking about Exit Planning, it only makes sense to open things up by addressing the question “What is Exit Planning?” The Exit Planning Institute defines exit planning as:
[blockquote background=”#ffffff”]Exit planning is the creation of a comprehensive road map to allow a business owner to successfully exit a privately held business. An exit plan asks and answers all of the business, personal, financial, legal, and tax questions involved in selling a privately owned business.[/blockquote] That’s a pretty holistic look at the sale of a business. The idea is to understand and address all of the ramifications that stem from the sale of a privately held company. Most professionals will tell you that an exit plan should be:
- A formal, written document
- Consider all critical aspects in your exit
- Address deficiencies to improve prospects for a successful exit
- Started 3-5 years prior to the planned exit
That’s right – a 3-5 year process. That sounds like a lot of work, right? Well if you consider that a business is oftentimes the largest asset for a entrepreneur, you expect that the business sale will sustain your retirement, and these days the sale if largely goodwill, doesn’t it make sense to take a running start at it?
Given the size and scope of the subject, we’re going to spend the next few weeks talking about the various aspects of business valuation and exit planning. Stick around for the good stuff!