Seven steps to start planning your business exit strategy

Editor's Note

This article is sponsored by OPES Family Advisory

Planned or unplanned, every business owner eventually leaves their business one way or another. Owners who plan to leave typically have a better experience than those without any planning in place.

While each exit plan is as unique as the owner who creates it, properly crafted exit and transition plans have several signature characteristics:

• They aim to increase business value both in the short and long term;

• They are put into writing so that all involved can measure their progress toward the owner’s goals; and

• They incorporate accountability by holding the owner and each advisor to deadlines for completing each task.

Over many years of experience, OPES Family Advisory has developed a comprehensive seven-step process for business owners to follow to ensure an orderly and profitable business transition – whether planned or unplanned! 

Summary of the seven steps

As you read these steps, think about how you would answer.

Step one: Set exit objectives/goals

Have you determined your primary exit objectives in leaving the business, such as:

• Your desired departure date?

• The income you need to achieve your financial objectives?

• The person to whom you want to leave the business?

Do you have secondary objectives, such as taking care of certain employees or continuing the family legacy?

Step two: Quantify available resources

Do you know how much your business is worth? Do you know what the company’s cash flow is likely to be while and after you leave it? Do you know the amount of income you can expect to receive from your non-business investments after you exit the business?

Step three: Focus on business value

Do you know how to increase the value of your ownership interest? Do you know how to protect the business value you’ve already created? Do you know which actions are necessary to minimize income taxes not only today but also when you transfer ownership?

Step four: Sale to a third party

Do you know how to sell your business to a third party in a way that will maximize your cash and minimize your risk and tax liability?

Step five: Transfer to insiders (co-owners, family members or key employees)

Do you know how to transfer your business to family members, co-owners, or employees under the following conditions?

• Without losing control of the business until you have all of your cash in hand?

• While paying the lowest allowable amount in taxes?

Step six: Develop a contingency plan for the business

Have you done what it takes to ensure that the business survives if you do not?

Step seven: Develop a contingency plan for the owner’s family

Have you provided for your family’s financial well-being and continuity should you die or become incapacitated both before and after your ownership transfer?

If you would like an illustration of the seven-step path from where you are to your successful exit, please ask us for our exit plan roadmap. And be sure to keep an eye out for part two of this six-part blog series, which will explore the initial steps of exit and transition planning in more detail.

OPES Family Advisory's mission is to continually strive to be the premier wealth management provider to our clients. Through our unique wealth management process, we provide our clients with the intellectual framework to make sound financial decisions. We continually work to provide our clients with unparalleled personal service and peace of mind to allow them to dream, plan and prosper.

Dean Trudeau, CFP, OPES Family Advisory founder began his investment and advisory career in 1987 and has held the designation of certified financial planner for more than 20 years.

His impressive career has grown over the years to include principal of Horizon Financial Services, sales manager of Manulife Financial/Manulife Securities and district vice-president of RBC Global Asset Management.

Trudeau has a deep commitment to his field and over the years has been recognized with many industry awards and has been asked to speak at a variety of conferences. Along with a deep commitment to the profession, he believes strongly in working closely with all his clients in aspects of their lives to give them peace of mind.

From the archives