Facing Your Mortality with Proper Exit Planning
An estate plan or buy-sell agreement is no substitute for an exit plan if you have to unexpectedly sell your business. Exit planning covers a wide variety of factors and ensures a smooth transaction that has arrangements in place for elements including everything from your staff and vendors to landlords and leases. Exit planning with a qualified M&A advisor will also ensure that when you sell your business to take on another venture or retire, you will get maximum profit with minimum hassle.
All entrepreneurs and business owners are immortal until they are not. If you have an emergency exit plan with contingencies for your unexpected demise this will help your heirs to settle your business affairs more quickly and profitably.
What if you don’t unexpectedly pass away, but still have to sell your business long before you planned to? Approximately 40% of all people, including business owners, retire early for health reasons. In these unfortunate circumstances, it probably means your business has suffered.
However, if you have an exit plan created with the help of a trusted advisor, you won’t have to resign yourself to taking a lesser offer. You will most likely be able to avoid dealing with a long and drawn-out process that further exacerbates whatever difficult life circumstances might be forcing you to sell.
What If Nothing Happens?
What if you live a long and successful life and head into retirement as planned? Your estate plan or buy-sell agreement are again fairly useless. If you don’t have a solid exit plan, you may end up working a lot longer than you planned, as the sale process drags on. Or it may fail entirely due to small details that have derailed many a business transaction.
If you want to enjoy the fruits of your labor, you will probably be relying on converting some of the equity in your business to support your retirement lifestyle. For most owners, their business is a liquid asset. You will need a way to access the cash locked within it.
You will also need to spell out how you will exit the business. Will your exit be at the closing or will it be sometime later because you agree to staying on as a consultant to facilitate a smooth transfer? What happens to your employees, with your partners, vendors and other people you have agreements with? The good news is that if you to begin your exit planning with a qualified M&A advisor, all of these issues will be resolved when you are ready to sell your business.
Exit Planning is for the Living
A good exit plan will ensure when the time comes to sell your business, you will be ready and will enjoy a virtually hassle-free process. The end result will be that you gain maximum profits so you can enjoy your post-businessowner life to the fullest.
Michael J Schwantes is President & CEO of Creative Business Services/CBS-Global.
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