We understand that entrepreneurs are intensively focusing on current economic issues.  The economic focus is often considered a "left brained" activity.  In contrast, consider that exit planning can be an emotional process which is a right brained activity.  When the left brain keeps a continual eye on the changing business environment, the owner can be detracted from the need to focus on the eventual exit.  When business owners wrote their business plans (which entail both right and left brain activity), the exit strategy was probably addressed.  The exit section of the business plan may not have been highlighted, but exits are always a topic to be covered in a comprehensive plan.  As the business matured and day to day operational issues consumed the workday, the exit planning strategies in the business plan may have been overlooked.  We understand that:

    •  Owners will exit their business, even if the exit isn't thoroughly planned.
    •  Owners dream of exiting on their terms.
    •  Owners often want to choose the successor.

An exit plan helps guide you through the exit process and addresses the challenges and decisions the owner will face.  The exit plan will document the entrepreneurs road map based on the owner's objectives.  Exit plans are not rigid "to do lists."  They are flexible and recognize the changing economic, business, and personal environments.  As the owner's objectives change over time, the exit strategies considered will change to address the new priorities.

Exit Planning encompasses establishing exit objectives and SMART goals (Specific, Measurable, Attainable, Relevant, Time based).

Certified Acquisition Advisors helps owners creatively develop the flexible exit plan they need, so they can continue to focus on running their business.  If you're considering an exit in the next few years, developing and implementing an exit plan will help your Business gain value and increase your return on investment.


Are you ready to exit your business?  Are you emotionally ready?  Are you financially ready?  Are your expectations grounded in the realities of the current economy?  If you answered "No" to any of these questions, perhaps an introduction to exit planning is warranted.

During the "heyday" of Merger & Acquisition activity of the last decade, confusion reigned supreme in all areas encompassing the exiting of a business.  Many entrepreneurs viewed their exit as an "event", just another step along the road of fulfilling their financial dreams.  Advisors, on the other hand, viewed exits as a process.  To address the process, a new specialized area of practice has been developed.  Exit Planning now joins the ranks of financial planning, strategic planning and retirement planning.  You can view Exit Planning as a mix of these disciplines.

There are many ways to exit a business.  A sale to a third party is just one of the options from a menu of choices.  Just as there are many exit options, there are many resultant valuations to consider.  Education is the key to a successful business exit.  When an entrepreneur understands the options available, the path to dream fulfillment becomes more clear.

One of the first major hurdles to overcome deals with the interplay of emotional readiness and financial readiness.  Often they are on a collision course.  Some entrepreneurs may be "rich and ready" to exit, some may be burned out but in need of current income, some may have charitable intentions, some may wish to sell a portion of the business and continue working, some may wish to transfer ownership to employees and/or management, just to name a few transfer channels.  Each method considered could, and probably will, result in a different valuation of the business, different tax results, and different amounts of proceeds to the exiting entrepreneur.

Exit Planning addresses these issues.  Because of the interplay of valuation, sale preparation, financial planning and all the emotional issues that relate to an entrepreneur's daily involvement and attachment to the business, Exit Planning becomes a lengthy process.

A businesses valuation is one of the most confusing components of exit planning.  Entrepreneurs, in general, value their business higher than outsiders.  Why?  Probably due to Country Club War Stories, Cocktail Hour braggadocio, Emotional guilt caused by perceived family neglect when the entrepreneur worked 24/7, and most important, owner attachment and emotions.  Some perspective is in order.

Rob Slee, author of Private Capital Markets, developed the concept of "Value Worlds."  The value of a business varies depending on which value world from which it is viewed.  For example, "Market Value" is the value world used by business brokers, Merger & Acquisition Intermediaries and Investment Bankers.  Market Value is the value resulting from an outside sale.  "Fair Market Value" is the value world visited by estate and gift planners.  A business's value in this value world is less the Market Value.  The issue is both simple and complex, and is covered in the exit planning process.

Owners choose the value.  Based on their motive or objective, there is a transfer channel.  The channel has several transfer methods.  The methods result in different values.  Confusing?  Click on the link below to see a value world diagram illustrating several of the different values a business may have at any one time.

Entrepreneurs didn't learn exit planning concepts in school.  Exit Planning encompasses an "amalgamation" of concepts, tools, techniques, theory and practical applications that your professional advisor can address.


Exit Planning is rarely a daily activity of business owners.  In fact, it is usually the last thing owners want to think about.  The daily exhilaration of running the business takes precedence and is always on the "front burner."

When owners reach a proverbial crossroad of thoughts between the places they want to visit in the future and things they want to do in the future, exit planning may begin to move up to the front of the stove.  In short, when owners begin dreaming of accomplishing the things on their "bucket list", exiting the business may come to mind.

Another driver of the exit planning process has to do with financial independence.  Since financial independence is a common goal of entrepreneurs, the exit planning process brings this into focus.  Your exit planner will help you determine if you have the financial wherewithal to go where, and do what, you want.

Exit Plans vary, but when properly crafted, you will go through several "steps".

1.  Set Exit Objectives- What is your desired departure date?  How much income do you
need to be financially secure?  What kind of buyer or successor do you prefer?  Do you     want to keep the business in the family?  Do you want to transfer the business to      employees or charity?

2.  Establish a valuation range for the business.  The business is usually the owner's most valuable asset, but the value constantly changes.  Also, valuations can be confusing
from several perspectives.  First, valuations of privately held businesses are not static. Secondly, there are many different values a business has -- all at the same time. There  is a "Fair Market Value", a "Market Value", an "Owner Value", an "Insurable Value", a "Collateral Value", and several more.  A business's value is dependent on the owner's objectives established in Step 1 above.  

As the objectives change, so will the value  change.  An independent valuation by a credentialed business valuator should be obtained.  Even if a valuation report is obtained, owners need to understand that the valuation is at a specific date.  Over time, the value could change dramatically.  For example, any change in customer makeup or the financial environment can have a dramatic affect on the value.

 3.  Prepare a personal financial statement and budget.  Evaluate your non business financial assets, determine your normal annual cash flow budget (income earned vs. expenses paid).  You should know and thoroughly document your cash needs.  Your personal financial situation may drastically change when you exit the business, and this step is part of your preparedness.

 4.  Determine the value gap Based on the business's value, and a modest rate of return on the after tax proceeds, will you have enough income to satisfy all your needs? Remember, you will no longer have the income generated by the business.  For instance, if the business generated $250,000 in cash flow, but the earnings on the after tax sales proceeds only generate a $100,000 annual return, will you be able to have the retirement lifestyle you dream about?  If not, there is a value gap - the amount your business is currently worth and what the value needs to be to meet your financial requirements.  If there is a value gap, either you must adjust your lifestyle, or work on building the business's value before proceeding.

 5.  Review the strategic plan and address strategic priorities to make the business more valuable.  

A few things owners can do include:

                    •  Clean up the balance sheets.
                    •  Create curb appeal.
                    •  Critically review expenses and cut all cost not adding to customer value
                    •  Document and flow chart all processes.
                    •  Create "dash boards" to be able to quickly determine any changes to
                       operational performance so that the changes can be addressed.
                    •  Review marketing plans and fine-tune them if needed.
                    •  Review the capabilities of employees and management.  Take team
                       development to a higher level.  Enhance learning and training programs to
                       generate higher performance and achievement.

6.  View the business through the eyes of a new owner.  Be aware that buyers may view the business from a historical perspective.  They "look through the rear view mirror."
Buyers want to be confident that the past can be used to predict the future.  Buyer 
candidates and potential other transferees will have many concerns including:

                    •  How risky is it?  Be ready to answer the tough questions.
                    •  Can the business be learned and mastered quickly?  Document everything
                       you know about the business and the industry to lessen the learning curve.
                    •  Are income and cash flow projections backed up by reasonable

                    •  Would the seller buy his or her own business?  If not, understand why

                       not  and eliminate the problem.
                    •  What is the company's culture?  All businesses have one.  Ask customers,
                       vendors and employees.  Evaluate the responses.  Don't be surprised if they
                       don't share the owner's perspective.

 7.  Create contingency plans.  Businesses often take time to sell or transfer.  A lot can happen between the start of the exit planning and the inevitable transfer. Owners should take prudent measures to insure the business can survive if they do not.  They  should also have a contingency plan for the family's financial well being.  Financial
planning, estate planning and insurance planning should all be addressed.  Painful? -
probably.  Expensive? - could be.  Necessary? - absolutely.

Exits can be very emotional and should not be left to chance.  Exit Planning takes time and a new focus.  The tools and techniques entrepreneurs use to develop and grow their businesses do not guarantee a successful exit.  Because the time devoted to exit planning often competes and conflicts with the time needed to continue operating the business successfully, many owners hire exit planning coaches or advisors.  Don't go it alone unless you have a captive and qualified team in place.


Entrepreneurs are constantly barraged with calls from consultants offering a variety of services that, from a layman's point of view, can all sound similar and promise similar results.  Even the professional certifications and designations can sound similar and cause confusion.  The consultants may have handles such as Business Exit Planner, Strategic Planner, Business Succession Planner, Business Transition Planner, Certified Business Intermediary, Certified Financial Planner, Certified Merger & Acquisition Advisor, Certified Public Accountant, and what can seem to be a myriad of qualifications.  No matter who the owner uses to help them with their exit planning, they should understand that business exit planning can be a lengthy process and will take time to implement.  Exit planning is not a one size fits all engagement.  There are a number of steps and factors to consider to have a successful exit and to maximize the value of the business.

So, to review, what is Exit Planning?  It starts with evaluating goals and resources, and documenting results.  Factors to consider include:

     •  The owner's goals on exiting - both for the business and for the owner.

Align owner goals with family goals.

     •  Identifying barriers to the exit.
     •  Outlining the owner's financial needs.
     •  Evaluating the owner's dependence on the business, from both a financial and

         emotional point of view.
     •  Determining which transfer channels the owner wishes to explore.
     •  Determining value ranges for the various transfer channels.
     •  Determining who the potential buyers or transferees may be.
     •  Outlining steps to increase the value of the business.

When exploring the steps, consideration must be given to the lending environment, the economy, the owner's health and age, the family's needs and desires, and industry dynamics.

You can see that Exit Planning entails a combination of family succession planning, business strategic planning, retirement planning, financial planning and estate tax planning.  Having a well thought out exit plan is crucial to the succession of the business, a successful retirement and the financial well being of the owner.


Exit planners who have "been on the firing line" for process improvement, tax planning, retirement planning, vision and mission development, successor - leadership training, building human resources infrastructure and leading change management may be the best consultants you can choose to serve you in this area.  CAA consultants have "been there, done that."