Succession and exit planning are processes involving a change in the ownership of your business. While succession doesn’t involve immediately removing all future involvement in your business, exit planning strategizes your immediate exit.

Succession

Succession is passing ownership to a chosen successor in instances of retirement, death, or business incapacitation. It ensures your business continues to operate under capable leadership.

Exit Planning

A business exit plan is the transfer of ownership of your business by selling your business to outside buyers, merging with another company, being acquired by another company, passing your business on to a successor, or pursuing an employee or management buyout.

The Succession Process

When you pursue an Employee Stock Ownership Plan (ESOP) or choose a familial successor, leadership and business skill development are critical in completing the succession. Additionally, you’ll most likely create the payment plan for the buyout – making your exit gradual rather than immediate. As the business owner, you keep influence over the business operations and development until the successful buyout.

The Exit Planning Process

With an exit plan, you’ve established a clear exit goal: once you’ve fulfilled that goal, your exit begins immediately. Additionally, because your exit strategy can be external, you may not remain in the business after selling. If selling to an external buyer or being acquired in a mergers and acquisitions deal, the new buyer or acquiring company immediately takes over by completing a quicker sale. In other words, you’ll have no remaining influence in the business as the transfer of ownership is secured. Exit planning involves creating a voluntary and involuntary exit plan in case of financial emergency, incapacitation, or death. And finally, estate, legacy, and philanthropic planning as needed.

Similar Processes in Succession and Exit Planning

• We pursue the optimal succession or exit strategy that aligns with your vision, values, and personal and professional goals.
• Financial preparedness: succession and exit planning require funding. I create financial projections for my clients to determine the revenue needed to fund their planning.
• Employee/successor development: your co-owner, family successor, employee, or manager undergoes training to assume leadership by managing responsibilities with minimal supervision for a smooth transfer of ownership.

Different Processes in Success and Exit Planning

• Valuation: we determine your business value during exit planning to sell your business at an optimal sales price to your highest potential buyer.
• Estate and legacy planning: incorporated into exit planning to secure your assets and confirm their distribution to beneficiaries according to your wishes. Your estate is usually not involved in succession unless used in an involuntary exit – or you set up a cross-purchase agreement with a business partner.
• Voluntary and involuntary exit planning: we create these specific business exit plans to ensure your security and legacy are intact even in unpredictable circumstances.

Ready to get started on your business transition process? You can book a consultation with me today for your business transition.