Selling a business is typically a once in a lifetime event for most business owners (those that aren’t serial entrepreneurs) and it is often the biggest financial transaction they will experience.
Years of hard work, financial sacrifices and immeasurable sweat equity went into every phase of establishing a successful business and yet, come retirement, most owners have invested little time getting themselves or their business ready for what comes next: a business that no longer depends on them being at the helm and a personal identity that isn’t defined by running their business.
Transitioning, selling or shuttering a business is a complex process that should be planned for long before an owner’s contemplated exit date. Most owners head into their transition planning with a false sense of security regarding a number of things, the most detrimental being the actual value of their business followed by the belief they have ample time to sort out all the intricate details.
Over the lifetime of a business owner, many advisors will come and go. Some will advise and assist with specific transactions and others will walk alongside the owner throughout their lifetime. Where it may take one or two experienced advisors working together to construct a comprehensive business plan or personal financial plan, selling a business involves a synchronized collaboration of many different professionals – an exit planning specialist, merger and acquisition or sell-side advisor, financial planner, investment advisor, personal and corporate lawyers and accountants.
This team of trusted professionals should be led by a strong quarterback; an individual whose role is to facilitate collaboration between the owner, relevant employees and other professionals to keep everyone on track and up to date.
In order to curate a comprehensive exit plan, an owner must take the time to consider what it is they want for themselves, their family and their business. They must commit to step off the daily treadmill and dedicate time to reflect. “What does exiting look like for me? For the business? How and when will it happen? Who will be my successor? What is my life AFTER business?”
In addition to exploring these weighty questions, there are numerous transition options a business owner should be aware of and investigate. These options range from intergenerational family transfer to internal (employee) or external (third-party) sale, liquidation, or a hybrid of these options. Measuring the distinct pros and cons of each option is important because what works for one owner may not work for another. The earlier a business owner aligns their goals and wishes with the optimal transition path, the more time there will be to plan for and safeguard them.
Adjacent to exit planning there is business continuity aka contingency planning. Though they are each distinct, both are interconnected in that they contribute to the holistic wellness and value of the business. In some ways, business continuity planning should be a higher, immediate priority for owners than exit planning because it accounts for the unexpected. Statistics show that 55% of business exits are involuntary due to death, disability, divorce, distress and disagreement. 
The purpose of a contingency plan is to allow an organization to return to its daily operations as quickly as possible after an unforeseen event – think natural disaster, a technology meltdown or a global pandemic. It is a blueprint for how to deal with unusual events and regardless of size, all organizations need contingency plans.
Exit planning is crucial and one thing a business owner must have, right from day one, is a business continuity plan. For help establishing your exit or business continuity plan, connect with us.
 Exit Planning Institute