One of the historical bright spots in the U.S. economy has been the fertile opportunity for people to start their own businesses. However, increased government regulations make this American dream more difficult. Some people prefer to buy an existing business rather than accepting the challenge of starting their own.
A well-planned business exit strategy can help entrepreneurs prepare for their own retirement, while also providing excellent opportunities for future business owners.
A business exit strategy will ideally be voluntary and intentional: a merger with another company or perhaps the sale of the business before retirement. Unfortunately, some exit strategies may be involuntary, such as being due to the death or disability of the owner, a divorce, a bankruptcy, or a shareholder dispute.
Because life includes both pleasant successes and discouraging challenges, it is important for all business owners to plan in advance for an optimal exit strategy, both voluntary and involuntary. I recommend that business owners assemble a trusted team of experienced professionals:
- A wealth advisor who understands the economic and investment issues,
- An accountant who understands the tax issues,
- An attorney who understands the legal issues,
- An independent business valuation professional,
- An insurance advisor who can provide insurance solutions for liquidity, and
- A human-resource consultant to identify and assist with the transfer of business leadership responsibilities.
This business exit planning is best developed well in advance of the target date. Typically, the better the advance planning, the better the results.
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