20 Exit Planning Questions that Every Business Owner Should Ask Themselves

/in , /by Al Statz

Eventually every business owner will retire and hand over the keys, and in my experience, the farther ahead owners plan for their exit the happier they’ll be with their exit.

While there are many things to consider when planning an exit, particularly for owner-operators of businesses, here is a list of twenty questions that business owners should be able to answer with clarity and confidence.

Twenty Questions that Every Business Owner Should Ask

  1. When do I want to retire? And what will I do when I retire?
  2. What must my company be worth when I sell, to fund my desired retirement lifestyle or next business venture?
  3. What is my company worth today?
  4. Is there a gap between what my business is worth and what I need? If so, what can I do to close that gap?
  5. How marketable is my business?
  6. Do I want a role in the company post sale? What role and for how long?
  7. What should I be doing to demonstrate to buyers that my company will continue to prosper when I leave?
  8. What are the potential benefits and risks of retaining a minority equity stake in the company?
  9. What will my taxes be on a sale? And do I have the best entity structure to maximize my after-tax proceeds?  If I don’t, what can be changed and when?
  10. Do I understand the pros and cons of selling to family, managers, a private equity group, a consolidator, a competitor?
  11. What should I do if I want to sell to my key managers? And is my company an ESOP candidate?
  12. What should I do if I want to sell to my children?
  13. Which of our key employees should we have non-compete agreements or retention bonus agreements with?
  14. What language should we have in our contracts with customers and suppliers to facilitate a change of ownership?
  15. What is considered high customer concentration in my industry and should I be taking steps now to diversify?
  16. What is considered good financial performance in my industry and how does my company compare?
  17. Should our financials be Audited or Reviewed? For how many years before the sale?
  18. Should we have a Quality of Earnings analysis done before going to market?
  19. In a sale, how does it matter if our liability insurance policy is claims made vs occurrence? What is tail insurance?
  20. Beyond money, what are my priorities and preferences in a sale?

For those seeking professional assistance, engaging an M&A advisory firm is a great way to set your business up for post-sale success. At Exit Strategies Group, we can estimate the probable selling price or fair market value of your business. We can evaluate your business for factors that are boosting or detracting from its value and marketability, and we can work with you to improve these factors over time. And when you are ready to sell, we can maximize your value and ensure a smooth and successful transition through our structured M&A sale process.

Al Statz is the founder and President of Exit Strategies Group, Inc. For further information on this subject or to discuss an M&A, exit planning or business valuation question or need, Email Al or call him at 707-781-8580.