The business exit planning process is the process of preparing a business for transition from the current owner to the next owner.
While this sometimes means the sale of the business to a third party with the intention of acquiring the cash value of the business the owner has created by building and growing the business, exit planning is not just about getting a business ready for sale a few months before the owner wants to retire. Rather, when done properly, the business owner is engaged with a carefully constructed multidisciplinary management plan that provides accountability through a clear, reasoned, and systematic structure for achieving financial goals.
The exit planning process requires the owner or owners to identify their long-term financial goals so the eventual sale of the business can meet those monetary goals. This means the current value of the business must be calculated so a business growth plan can be created that builds business value in accordance with a realistic timeline. The next step is following the plan so the business value is increased, usually by increasing economic benefits and reducing the many varieties of risk. Ultimately, the owner will leave the business, so a plan for transition must be in place to assure the safe and efficient progression.
Excerpt from pp. 3-4 of Exit Insight: Getting to “Sold!” by Joseph M. Maas, now available at Amazon
Copyright 2014 © Joseph M. Maas
