Defined: What is an Exit Plan?

Defined: What is an Exit Plan?

A business exit plan outlines how you will exit your business when the time comes. Succession and exit planning are both terms used for this process.

Why Is It Essential to Have an Exit Plan?

Exit planning will help you prepare your business and yourself for the financial impact of selling your largest asset – your business. An effective exit plan will outline for you:

  • When you plan to sell
  • Who do you plan to sell to
  • How much the sale will fund your retirement

When Should I Start Exit Planning?

Starting early will give you the best results. Plan to begin five years before you plan to exit and create a plan that includes flexibility as things may change from the start of your planning process to the time you exit.

Planning early allows time to determine the current value of your business as compared to what you wish to have when you exit. You can then develop a plan to close that gap by adding value to the company.

sva-certified-public-accountants-building-business-value-to-close-the-gapBIZ TIP: Building Business Value to Close the Gap

How Do I Start Exit Planning?

Create a team of advisors with the specific expertise required. Your advisory team should include an accountant, legal counsel, valuation expert, and financial advisor. You may also need a business broker and banker, depending on your sale type.

Start by reviewing the Exit Planning Checklist to help guide you through the process.

Download Exit Planning Checklist

What Are My Options for Exiting?

There are six options to choose from:

  1. Pass ownership to family
  2. Sell to a key employee(s)
  3. Create an Employee Stock Ownership Plan (ESOP)
  4. Sell to a third party
  5. Merge with another company
  6. Sell assets and liquidate

What If I Don't Plan Early Enough?

While starting early is preferred, sometimes circumstances require a quicker exit strategy. Gather your advisory team and discuss your personal circumstances. With their expertise, you can create a plan that fits your timeline.

Don’t make quick decisions. Take the time to review the available opportunities and prepare the business as much as possible. Preparation will help you get the best value and tax planning will help you maximize your profits.

What If I Don't Have an Advisory Team?

You must have a team of experts who will work together with your best interests in mind. Start with an advisor you trust and ask them to help you develop a team. You will need expert valuation and tax advice to get the best bottom-line payout.

Look beyond your accountant (if required) for an advisor who can help you with due diligence, building value, creating effective buy-sell agreements, cash flow management, and profitability goals.

Prepare For the Unexpected

Economic challenges, inflation, staffing shortages, supply chain issues, and the pandemic have all impacted how businesses plan for the future. It might be the right time to exit, or you may need to wait out the current economic environment. Your plan will need to be flexible enough to accommodate current trends.

Exit Planning Definitive Guide Cover ImageeGUIDE: Exit Planning: The Official Guide

That doesn’t mean you shouldn’t plan. Start early if you can. Start now if you need to move quickly. Get the advice of experts. Make the most of the time you have to make your exit as smooth as possible.

Request More Information

© 2022 SVA Certified Public Accountants

Biz Tip Topic Expert: Nicole Gralapp, CPA, CExP™

Nicole Gralapp, CPA, CExP™

Nicole is a Principal at SVA Certified Public Accountants working primarily with closely-held businesses and individual clients. Nicole performs a variety of tax, assurance and business consulting functions. She provides clients with technical expertise in areas such as tax planning, financial reporting, financial projections, budgeting, financial and estate planning and review of internal controls. Her experience in the hospitality, restaurant, construction and professional services industries gives her the ability to consult with clients in a variety of areas.

Awards and Affiliations

Forbes Names SVA as 2021 America's Best Accounting Firms


Madison, WI
1221 John Q Hammons Dr, Suite 100
Madison, WI 53717
(608) 831-8181

Milwaukee, WI
18650 W. Corporate Drive, Suite 200
Brookfield, WI 53045
(262) 641-6888

Colorado Springs, CO
1880 Office Club Pointe, Suite 128
Colorado Springs, CO 80920
(719) 413-5551

SVA BBB Business Review Man Standing


(888) 574-4782

Are you in the know on the latest business trends, tips, strategies, and tax implications? SVA’s Biz Tips are quick reads on timely information sent to you as soon as they are published.

Connect With Us

Copyright © 2022 SVA Certified Public Accountants | Privacy Policy | Cookie Policy | CCPA