Your Exit Planning “10 Question” Checklist

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Maybe you’ve been thinking recently about selling your financial advisory business. Perhaps it’s that time in your life-cycle planning, or the thrill seems to be dimming, or maybe you want to take some of your chips off the table after the recent market crisis. Whatever the reason, you are not alone. Reportedly, nearly 50 percent of all successful business owners over the age of 55 hope to cash out and move on within five years.

Like so much else in life, things generally work out better if you have a plan. Here are ten key questions:

  1. Have you decided the month and year you want to be out of your current business?
  2. Do you know the current open market value of your business?
  3. Have you identified one or more highly qualified buyers?
  4. Have you started serious discussions about your intentions with your family?
  5. Do you know the value drivers of your business and have a specific action plan that can maximize them between now and the date you plan to exit your business?
  6. Have you built your exit plan timeline, with critical milestones and major activities needed to make it happen?
  7. Do you know how to structure the deal to maximize the after-tax income you will receive from the sale to a partner, key employee or family member?
  8. Do you know how to reduce the risks you will be assuming under the various extended term payout elements included in most deals?
  9. Do you have a succession plan to protect the value of your business if you unexpectedly get seriously ill, become disabled or die?
  10. When you sell, you will be closing a chapter of a big part of your life. How excited are you by the new possibilities that will open up in your life?

Just recently, we’ve seen a few business sales fall apart because the parties didn’t start the discussions with a true open market value of the company—and it was usually the seller who was the guilty party! Start on your plan now. Answer the “10 Questions.” If you don’t know the answers, find out. It will save you time and grief down the road.

Sam HullSam Hull, CFP®, CPCC, ACC, RLP
Whitewater Transitions LLC
Arundel, Maine

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