Having an exit strategy is crucial for business owners for several reasons. It allows for a planned and structured approach to leaving the business, which can have significant financial implications. For instance, the business is often the owner’s largest asset, and a sudden decision to sell can be catastrophic without a proper plan. An exit strategy helps to manage tax implications effectively, as the sale of a business can affect the owners’ taxes differently based on the business structure, such as S corporations or limited liability companies versus C corporations.

Moreover, an exit strategy can ensure that the business owner maximizes the value of their business upon exit, whether through sale, succession, or other means. It also provides a clear plan, which is essential for personal financial planning and retirement. Without an exit strategy, business owners may find themselves unable to retire comfortably or pass on their business to the next generation.

For a mature business that is nearing an exit plan we will discuss various strategies:

• Outright sale to a third party/synergistic merger/family transfer
• Retain without selling and hire sophisticated executive successors
• Employee Stock Ownership Plans (ESOPs)
• Charitable Remainder Trusts (CRTs)
• Intentionally Defective Grantor Trusts (IDGTs)
• Qualified Small Business Stock (QSBS)
• Structured Sales
• Installment Sales
• Opportunity Zone