BCC Advisers

What’s Your Exit Strategy? Succession Planning for Closely Held Businesses

July 8, 2022

By Jennifer Julander, ASA - Vice President

As a business owner nearing retirement, you are faced with the monumental task of planning an exit strategy. The ideal strategy is one that fits both your business and personal objectives. If your goal is to optimize monetary proceeds, selling to another business or on the open market may provide the most profitable outcome. If ensuring your legacy and the business you built carries on, family succession or selling to employees may be the best option. Whichever exit strategy you choose, planning well in advance is essential to giving you the time necessary to maximize your result.

While planning, look for opportunities to “get your house in order.” Straighten up financial records, eliminate redundancies and worthless inventory, and install or improve systems that drive value. Prepare your management team and identify potential future leaders, developing their skills so they are prepared to fill key roles when the time comes.

Finally, hire professionals. This will pay off in the long run and making a rookie mistake on your own could be costly. Consult with your legal and tax advisers to employ best tax strategies. Retain a valuation expert to help you understand your company’s value and assist in identifying opportunities to increase value. Finally, consider engaging an experienced investment banking (M&A) firm to guide you through what could be an intimidating sale process. Having a great advisory team in place can help secure a successful business transfer and a happy retirement!

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