All privately held business owners will one day exit their business. The exit will be voluntary (at a time of the business owner’s choosing) or it will be involuntary (due to burnout, illness, disability, marital problems or death). An exit strategy is needed to ensure a voluntary exit. A contingency plan is needed to be prepared for an involuntary exit. Either way – a plan is needed!
The largest transfer of private wealth in history will occur over the coming decade. Some estimates have this transfer at $10 trillion in the U.S. and $1.3 trillion in Canada. The increasing supply of businesses for sale will create a buyer’s market, in which buyers will only pay top dollar for the most attractive businesses.
Many business owners are relying on the proceeds from the sale of their companies to fund their “Life After Business”. Business owners that come to market unprepared will likely sell for a discount, potentially significant, to those that have invested the time and effort to prepare for sale.
Developing an exit plan provides a tremendous return on investment. Some of the major benefits of having an exit strategy include:
- Maximize business value, saleability and price;
- Minimize taxes paid on sale of business;
- Regain control over how and when the exit occurs;
- Ensure business and personal goals are achieved;
- Minimize stress and conflict among the business owner, employees and family; and
- Ensure continuity of the business.
There are many challenges and obstacles to developing and implementing an effective exit plan. However, the benefits far outweigh the costs and there are resources for business owners to turn to for assistance.
Call a VSP professional when you need support with the following:
- Development of a Comprehensive Exit Plan
- Understanding how much your business is worth and how to enhance this value
- Assessing your exit options and determining which is most appropriate for you
Click here to view a pdf summary of the process we typically follow with our exit / succession planning support engagements.
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