A Step-by-Step Guide for a Business Owner Planning Their Exit

A well-planned business exit protects an owner’s wealth, strengthens their business, and ensures a smooth transition for all stakeholders. Whether the business owner hopes to sell for maximum value, pass the business to the next generation, or gradually step back from daily operations, a thoughtful business exit plan has a positive, transformational impact on an owner’s next chapter.

It is best to view a business exit first as a thoughtful personal decision and then as a complex business transaction that complements both the owner’s personal and business goals. After determining the personal considerations around the business exit, the business owner is better able to plan their exit. The owner’s transition from the business should be coordinated with a qualified exit planning advisor, like a Certified Business Exit Consultant,® (CBEC) and include the assistance of several different advisors who can empower the business owner towards a smooth, successful outcome.

Below is a step-by-step guide on how to plan a business exit:

View The Business Exit as a Process, Not an Event:

Let’s start by comparing a business exit to the sale of a home. While selling a home generally includes several things that need to be addressed before you can put your house on the market, like painting and making a few repairs that would increase the home’s “curb appeal,” it is, otherwise, a relatively straight forward process. By contrast, a business exit is a much more complex transaction involving many personal, financial, emotional, and business considerations in addition to more than half a dozen exit options requiring the assistance of many different professional advisors.

Align Your Personal and Business Exit Goals:

The first step in making a solid exit planning decision is to be clear on your personal and business goals. Nothing is more critical to the process of an exit than gaining clarity around what will be a satisfactory outcome for all the people involved in your business and personal life. It is a challenging task to forecast how your future exit will impact your employees, customers, vendors, creditors, community, trusted advisors, and family. Each of these stakeholders are reliant on the decisions that you make and will likely have different responses. Beyond these goals is understanding which exit option is best to achieve your objectives. You should start this process by asking yourself questions like:

What does life look like after I exit the business ?
How soon do I want to transition out ?
How much money will I need to support my ideal lifestyle ?
Do I want to stay involved in the business after the sale ? and
What legacy do I want to leave ?

Time Your Exit:

Aligning your personal and business readiness for exit with financial conditions that favor a successful exit – such as the availability of favorable bank loan financing, positive industry and market conditions, etc. – can have a meaningful impact on the success of your exit. In order to navigate this complex transaction, you must also determine the optimal time for your exit. Aligning your optimal personal considerations, business performance, and market timing for your exit is a tough task but of key importance to your overall outcome.

Who Is Going to Assist with Your Exit ?

After deciding on the “how” and the “when” of your exit plan, you also need to determine “who” is going to assist you with your exit. Outside advice is critical to the success of a business exit. As previously mentioned, a business owner should first select an experienced exit consultant to quarterback the process. Next, with the exit consultant, they should bring on experienced practitioners for the various types of professional advice that will be needed. In addition to an experienced exit advisor – like a Certified Business Exit Consultant (CBEC®) – these professional advisors could include:

A CPA or Tax Strategist;
An Attorney;
A CFP or Wealth Manager;
A Business Consultant; and
A Business Broker, M&A Advisor, or Investment Banker.

Create The Exit Plan:

After thinking about your personal and business goals and selecting an experienced, certified exit advisor, you are ready to start planning your exit. Your personal and business goals will provide powerful insights about your best exit strategy.

The International Exit Planning Association (IEPA) has created three important assessments that have been completed by thousands of business owners and evaluate the business owner’s “personal readiness” (BERI®), the business’ “dependency on the owner” (ODI®), and the business’ “growth potential” (GPI®) to help the business owner select their best exit option.

Understand Your Exit Options:

There are a multitude of ways to exit a business, and each has different financial, tax, and emotional implications. Common exit options include:

■ Selling to a Third Party:

Through a Business Broker or M&A Advisor. This may yield the highest purchase price, especially for companies with strong financials and recurring revenue.

■ Family Succession:

Transferring ownership to children or relatives. This requires early planning and open communication to ensure readiness and capability.

■ Management Buyout (MBO):

Selling the business to key employees or leadership.

■ Employee Stock Ownership Plan (ESOP):

Allows employees to acquire ownership over time while providing the seller tax advantages.

■ Merger or Strategic Partnership:

Joining another company to increase scale, market share, or leverage synergies or other business opportunities.

■ Orderly Liquidation:

Appropriate when a business has limited transferability or when an owner prefers a clean exit.

Understanding your options early helps you structure the business to align with the preferred path.

Get a Business Valuation:

A professional business valuation reveals:

What your business is worth today;
Whether the sale of your business can support your retirement goals;
How attractive your business is to buyers; and
Where value gaps exist.

Most owners overestimate the value of their business. A professional valuation gives you clarity and direction for building the value you need to comfortably retire.

Identify Value Gaps and Create a Business Value Acceleration Plan:

After you know your “current” and “desired exit value,” the next step is to identify the “value gap” — that is, the difference between what the business is worth and what you need it to be worth.

A “business value acceleration plan” typically focuses on:

Improving financial reporting and profitability;
Reducing customer concentration risks;
Building a strong leadership team;
Documenting processes and systems;
Strengthening recurring or transferable revenue;
Reducing owner dependency; and
Enhancing brand differentiation.

These improvements not only increase valuation, but also create a stronger, more scalable business.

Strengthen Your Leadership Team, Reduce Owner Dependency, and De-Risk the Business:

One of the most common reason business exits fall through is that the business is too dependent on the owner. Buyers want a company that can thrive without its founder.

To reduce owner dependency and strengthen your leadership team:

Delegate key responsibilities;
Develop and/or hire a leadership team;
Document all critical processes;
Build strong financial controls; and
Prepare successors early.

De-risking your business involves reducing legal risks, like:

Protecting and documenting intellectual property;
Eliminating legal, compliance, and operational liabilities; and
Improving the business’ market position and competitive position.

In sum, a valuable business is a transferable business.

Plan for Taxes and Wealth Preservation:

Exit transactions almost always carry significant tax implications. Without professional planning, owners can easily lose 30–50% of their proceeds to taxes.

Working with tax advisors and wealth planners, who are experienced in scenario planning around the tax implications of a sale can:

Consider stock versus asset sale structures;
Minimize capital gains;
Evaluate estate planning strategies;
Explore trusts & gifting options; and
Prepare for liquidity events.

The earlier this planning begins, the more options — and savings — the seller will receive.

Prepare Emotionally, as Well as Financially:

Leaving a business is more than a financial transaction — it’s a personal one. Owners often struggle with identity loss, changes in daily routine, and concerns about legacy.

“Emotional readiness” involves:

Visualizing your post-exit life;
Pursuing new interests and passions;
Setting goals beyond the business; and
Allowing the transition from owner to the business’ next chapter.

A fulfilling exit requires clarity on what you’re leaving and what you’re moving toward.

Execute the Plan:

Once you find the right buyer or successor:

Prepare for due diligence;
Finalize legal agreements;
Communicate the transition to employees and customers;
Plan for your post-exit business involvement (if any); and
Ensure continuity for the business and stakeholders.

Final Thoughts:

A successful exit doesn’t happen by accident — it’s built through intention, preparation, and strategic action, and the complexity of the decisions business owners face as part of their business exit. This requires understanding that exit planning is a process. The process outlined herein is a proven exit process highlighted in The IEPA’s 6 Step Business Exit Process TM.

By planning early, assessing value, strengthening operations, and choosing the right path, business owners can exit on their own terms with confidence and financial security.

Exit planning is most effective when started 3–10 years before the transition, but even two years of preparation can dramatically improve outcomes.

Build your timeline by:

Setting milestones;
Reviewing progress annually;
Updating your valuation; and
Adjusting strategies based on market conditions.

About the Author:

James J. Talerico, Jr. is an award-winning author, blogger, speaker, and nationally recognized small to mid-sized (SMB) business expert.

With more than thirty- (30) years of diversified business experience, Jim has a solid track record and an A+ BBB rating helping thousands of business owners across the US and in Canada tackle tough business problems to improve the performance of their organizations.

His client success stories have been highlighted in the Wall St. Journal, Dallas Business Journal, Chicago Daily Herald, and on MSNBC’s Your Business. He was named “Texas Business Consulting CEO of the Year,” by CEO Today Magazine, identified as a “Top 10 Management Consulting Entrepreneur to Watch” by Entrepreneur Magazine, was listed among the “10 Most Visionary Companies to Watch” by The Inc. Magazine, and has also been ranked among the “Top Small Business Consultants” followed on Twitter.

For more than half a decade, Jim was a regular guest on “The Price of Business,” a nationally syndicated radio program on Bloomberg Talk Radio and has also appeared as a subject matter expert on many FOX Radio interviews. He is a regular contributor to several blog sites, like The International Exit Planning Association’s blog site, and has frequently been quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, The Entrepreneur’s Review, and on INC.com, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.

Jim received a Gold “Stevie Award” for “Thought Leader of the Year,” a Gold “Stevie Award” for “Media Hero of the Year During Covid” and a Bronze “Stevie Award” for “Best Entrepreneur” in the Category of “Business and Professional Services” at the American Business Awards ® in New York City. The competition received more than 3,700 nominations and is the premier accolade for business excellence in the US honoring organizations of all sizes and industries. Jim also received an “Outstanding Leadership Award” at the Money 2.0 Conference for his contributions to the financial services industry.

Jim is the author of “8 Steps to Becoming an ETHICS FOCUSED ORGANIZATION,™” a small business certification program that utilizes a unique eight – (8) step approach for strengthening ethics in any organization. The certification program won the Better Business Bureau’s “Torch Award for Ethics” for the North – Central Texas Region, the International Better Business Bureau’s “ Torch Award for Ethics,” and a Gold “Stevie Award” for “Ethics in Sales” at the International Sales & Customer Service Stevie Awards®. Participants who complete this certification program are eligible to receive eight – (8) continuing education units from the University of Texas’ Division of Enterprise Development.

Jim received his Certified Business Exit Consultant (CBEC)® designation from The International Exit Planning Association (IEPA) to help entrepreneurs, small business owners, family businesses, and middle market companies maximize their business exit, and he received his certification in succession planning from the ASPE. Jim currently Co-Chairs The IEPA’s education committee.

Jim is also a Certified Management Consultant (CMC)® and an active member of the Institute of Management Consultants. The Certified Management Consultant® mark is awarded by the Institute of Management Consultants USA (IMC USA) and represents evidence of the highest standards of consulting, a commitment to continuous development, and an adherence to the ethical canons of the profession. Less than 1% of all consultants in the world are Certified Management Consultants (CMC.)®