Business Exits: Planning

When and how to write a business plan exit strategy.

    A business exit strategy is necessary to secure a business owner’s future. However, according to William Buck’s Exit Smart Survey Report 2019, three-quarters of business owners (34%) don’t actually have an exit plan.

    If you own a business, at some point or another you’re going to need to consider your business exit - even if it’s simply to pass the reins onto a family member. So, be proactive, be prepared, and find out everything you need to know about business exit planning in this article. 

    Download the checklist

    Use the business exits checklist to ensure your company is healthy and prepared for sale with all the right critical documentation.

    When to develop your exit strategy 

    The sooner you start writing your company exit plan, the better. If you want to avoid the risks associated with poor business exit planning, a long-term strategy needs to be taken. 

    William Buck advises that it takes between 3 and 5 years to set up a business for a successful exit. Leave it to the last minute and you’re stopping your company from realizing its true value.   

    Types of exit strategies

    There are eight common business exit strategies:

    1. Merger and acquisition exit strategy (M&A deals)
    2. Selling your stake to a partner or investor
    3. Family succession
    4. Acquihires
    5. Management and employee buyouts (MBO)
    6. Initial Public Offering (IPO)
    7. Liquidation
    8. Bankruptcy

    Ultimately, each exit strategy is right for different people, for different reasons. Ambitious entrepreneurs might look at a merger or acquisition, while family succession or MBO could be an attractive option to other business owners. 

    Find out more about each one here: Types of Exit Strategies

    Exit strategies for a failing business

    Bankruptcy isn’t an exit that you’d find in a business plan. However, it is the last remaining exit strategy for a failing business. 

    A more planned approach might be to liquidate. This involves selling everything at market value and using the revenue to pay off any remaining debt. 

    For sole proprietors, walking away can be as easy as increasing your personal salary in the years preceding your exit, paying yourself bonuses, settling any debt, and then liquidating any remaining assets. Just be warned that with the larger income comes a larger tax bill.
    How to write a business plan

    How to write a business plan exit strategy

    The first step in business exit planning should be to ask yourself, how long do you want to stay involved in the business? If you envision your involvement being long-term, you might plan to liquidate or sell your shares. If you’re only in it for the short-term, you could merge, be acquired, or even IPO. 

    Next, ask yourself, what are your financial goals? These will certainly impact which exit strategy you choose. Finally: do you have investors or creditors to pay? 

    Research the pros and cons of different types of exit strategies before you begin writing your exit plan. Once you’ve chosen the exit strategy for you, make sure you include detail on the following, and what will happen to them as part of the exit strategy, in your business plan. This is important for business continuity.   
     
    1. Your personal & business financials
    2. Your investors and stakeholders
    3. New leadership
    4. Your employees
    5. Your customers

    Find out more about selling your business: How Do You Sell A Business

    Exit strategy business plan template

    The best advice we can give you in learning how to make a business exit plan is to follow a template.

    Ansarada’s M&A: Company Sale/Exit Pathway is a digitized checklist for your exit strategy. Containing all the critical documentation that ensures a company is healthy and prepared for sale, this exit strategy business plan template is built off insights from more than 35,000 transactions. 

    All you need to do is upload your documentation into our single, secure platform. Then, when it’s time for an exit, this same information is structured and ready to transfer seamlessly into a data room for a swift execution.

    The Pathway template can actually automate the entire business exit process. Watch your score progress towards 100% to signify both optimum business health and total readiness for an exit or sale, so you can maximize your business value and achieve the best outcome possible. 

    Get started on your exit plan today

    And ensure a successful, high-value exit from your business.
    Start your free trial of the M&A Exit Pathway