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Joan M. Ridley
Pres., CFP™, CEPA, CBI

2911 Turtle Creek Blvd., Suite 300
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E-MAIL:  info@businesswealthsolutions.net
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Your Business Exit- Think Of It As a New Beginning


Joan M. Ridley, CFP

It might surprise you to learn that 70% of former business owners regret selling their companies less than a year after the sale. The main reason is lack of planning on the part of the business owner, and not having a clear vision for what comes next.

Like a Captain Without a Chart Your Boat is Adrift

A recent survey showed that the number one reason business exits fail is due to lack of planning on the part of the owner1. A separate survey showed that most business owners devote more time planning family vacations than they do planning how and when to exit their business. Rather than being proactive, most are reactive and “forced” to sell because of burn-out, health issues, marital problems, or poor market conditions where there is no time to prepare correctly. As a result, most business owners exit their companies under the worst of circumstances.

Developing an exit plan is the most important thing you can do to protect the value of your business and your personal net worth. An exit plan is a comprehensive process that addresses all of the business, personal, financial, legal, and tax issues involved in exiting a privately owned business. A good exit plan includes contingencies for illness, burn-out, divorce, and even your death. Its purpose is to ensure the survival of the business in the event of your illness or death; to provide continuity for your employees, customers, vendors, to preserve wealth for you and your family; and to help you discover and embrace your vision of your own future. The over-riding purpose is to give you confidence and peace of mind throughout the exit process. Without a predetermined exit plan, you will probably undervalue your company and leave hard earned dollars on the table; pay too much in taxes; and lose control over the exit process.

Components of a Successful Exit Plan

  • A concise statement of your business and personal goals, and wealth preservation issues
  • A detailed business valuation to establish a market value for your business
  • An analysis of the pro’s and con’s of the different exit options
  • Suggestions to minimize the tax impact of any exit strategy considered
  • An action plan with critical business and personal steps needed to realize a successful exit

The Dream Team

Developing a sound exit plan requires teamwork and the full cooperation between your professional advisors. Although their roles need to be clearly defined, all must work collaboratively to help you reach your goals. Your exit planning team should include:

  • A business attorney with transaction experience
  • A personal financial advisor with expertise to prepare detailed financial projections
  • A wealth management professional
  • A tax specialist who is current on relevant tax issues
  • A life insurance professional
  • A strategic business consultant

Commit to a Schedule

Have formal meetings with all of your advisors in attendance at agreed upon intervals to insure that all advisors are on top of the various issues that need to be addressed. With regular meetings, where all advisors come prepared, you are assured that important steps in the exit process are executed on schedule. The fees involved in such an assemblage will pale in comparison to the benefits when you exit.

The Benefits of Exit Planning

  • Control over how and when you exit
  • Being positioned to attract top dollar in good times and bad
  • Eliminating capital gains tax
  • Ensuring that you achieve your business and personal goals
  • Having exit options to choose from
  • Reducing uncertainty for your family and employees

Your business exit is probably the largest transaction you will ever encounter, so invest the time and money to do it right. Get started as much as five years or more before you wish to exit. Start by dreaming about what comes next after you exit and then begin the exit process. A successful exit is just the beginning of your new and exciting life.

1Source: Price WaterhouseCoopers, Whose Business Is It Anyway? University of Connecticut Family Business Program, Family Business Survey.


Joan M. Ridley is president of Business Wealth Solutions, a Dallas-based advisory firm that consults with business owners about how to successfully grow and leave their business. Visit our website at www.bwsllc.net. Call us today at 214.692.9192 for a complimentary meeting to learn how we can help you get where you want to go.

Copyright 2007 Joan M. Ridley

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