Business Exit Planning: 7 Signs You Are Ready for an Exit
Whether you’ve been building your company for years or recently experienced rapid growth, you need to know when to act. Here are seven signs that you are ready to execute business exit planning.
1. Your business has reached peak growth or maturity
Businesses go through stages of growth, and when yours reaches a point of maturity, it may be the most valuable it will ever be — steady revenue, solid profit margins, and strong market position.
Make the most of this moment by understanding your company’s value and the strategy to maximize profits from the sale. Work with a team (think attorney, bookkeeper, seller agent, and financial planning team) to chart your exit.
2. You’re interested in pursuing new ventures
It’s natural for your interests to shift once you’ve built up your business to the point where you can consider selling it.
Cash flow planning and investment strategies will fund your next venture while maintaining long-term financial stability. Depending on a deal’s structure, you may have a significant liquidity event or structured payments that can open up opportunities you hadn’t even thought about.
3. Personal milestones or life transitions
When your life changes, your priorities may, too. A holistic approach that integrates lifestyle planning, retirement assessments, and estate planning will help ensure your wealth supports your next chapter.
4. Favorable market conditions
The market doesn’t always work in your favor, so take advantage when it does.
A well-timed exit strategy can help secure the highest value for your company. Structuring the sale to minimize tax exposure will ensure you keep as much of the proceeds as possible. The key to long-term post-exit financial success is a strategic asset allocation and investment mix that aligns your financial resources with your goals. Although you may stop working for your business, its proceeds shouldn’t stop working for you.
5. You’re experiencing burnout or fatigue
Running a business is demanding, and after years of hard work, it’s common to experience burnout. When your day-to-day is more stressful than rewarding, consider an exit.
If you’re ready to step back, have a financial plan to step forward.
Comprehensive planning, including retirement strategies or lifestyle adjustments, ensures your wealth is protected and aligned with your long-term goals. Many former business owners choose to take time away or live at a slower pace following an exit — time to reflect and marinate a new perspective.
6. You’ve received a lucrative acquisition offer
Sometimes, opportunity knocks. If you receive an unsolicited offer from a potential buyer, investor, or competitor and the price is right, it might be worth seriously considering it.
Keep track of the fundamentals of an acquisition offer. Analyze the terms, assess the tax implications, and ensure the deal aligns with your financial objectives.
Structuring the deal tax-efficiently and negotiating favorable terms will help you maximize your post-sale earnings. If the offer is compelling, having the proper support to evaluate and structure the sale will make all the difference.
7. You’ve reached your financial goals
Managing the sale proceeds becomes crucial when you’ve reached your financial goals. Wealth preservation, an investment strategy, and legacy planning ensure your wealth lasts and continues to grow. But preservation isn’t the end of the story. Wealth preservation is a prelude to wealth alignment—aligning your long-term vision and values through philanthropy, family legacy, or personal fulfillment. Wealth Alignment commits your time and money to your values and passions so you live a more purposeful life.
Recognizing the right time to exit your business must be twinned with a tax planning approach to maximize your return. When you are ready to exit, ensure your tax plan is fit for purpose.
The information contained in this document is provided for informational purposes only and should not be construed as individualized advice. For individualized advice, please consult with your adviser.
