Exit Planning

Exit planning provides an opportunity for owners to harvest the wealth created through their years of building a business.  At the end of their career or when the owner is ready to pursue other opportunities, an effective exit plan allows for a smooth transition to new a new owner or owners.  We facilitate a process that allows for a structured process that we strive to providing for a positive and financially rewarding outcome when at least four key issues* are addressed:

  • Strategic business issues – Overall assessment of the business and its relative level of attractiveness to other potential owners and what does the business need to succeed going forward.  This assessment will include an evaluation of the performance of the owners and key members of the management team.  Many years of pre-exit preparation may be required to make an effective exit feasible. 
  • Financial issues – Since an abrupt exit for an owner can have a substantial impact on their income and wealth, there is a risk, without a rigorous and well thought out plan, that leaving will reduce income below their accustomed standard of living.  Therefore, many exit plans include transaction structures that include contingent compensation or continuing consultancy arrangements to maintain some level of income relative to the owner’s contributions in future years.
  • Professional or career issues – Owners may consider remaining as an equity owner while choosing to end employment or remain as an employee while dissolving their ownership interest.  A change in duties may allow for a gradual reduction in contribution rather than a ending their role abruptly.
  • Personal issues – Some owners experience a sense of loss when the business they have put so much effort in building is no longer part of their lives.  Owners will need to ensure that the exit plan will address any lingering needs from having a reduced or eliminated role in running the organization.

An effective exit plan includes the following:

  • Development and establishing exit goals
  • Assessing owner financial and mental readiness to move towards exit
  • Identifying the exit category type the owner fits into based on a series of questions
  • Providing exit options for the owner
  • Valuation of the business
  • Execution of the exit plan

We are available to assist in developing an effective exit plan that reduces the possibility of unforeseen outcomes and provide for a smooth transition for the business.

* Based on Chris Evans and Frank Evans, “Valuation for M&A”, 2018