A well executed exit plan will greatly impact your financial path. It is a groundbreaking decision that can successfully and smoothly jumpstart your next venture or make your retirement plan financially secure and personally fulfilling.
What will this process look like? Let this exit planning checklist we’ve prepared be your guide.
Understanding the Importance of an Exit Plan
Natalie Roberts, CEO of the M&A firm for women-owned companies, iKadre, emphasizes an important lesson from her years of experience and going through major acquisition deals: “…the most successful exits begin with the end in mind.”
The Need for a Business Continuity Plan
The bottom line of an exit may be to maximize the price, but having a strategy in place is just as important to safeguard your company’s future. Without the execution of a clear plan, leadership transitions can become disruptive, eroding stability and employee confidence.
Benefits of Early Exit Planning
Exit planning prepares successors, be they family, internal leaders, or external buyers, for the operations so that everything runs steadily through change. It also acts as a safety net during unforeseen events like illness, market downturns, or sudden departures, helping to preserve business value and avoid rushed decisions.
More than just a safety measure, a continuity plan strengthens your business against market volatility by reinforcing financial stability and creating flexibility for future transitions.
Creating Your Exit Planning Checklist
Step 1: Define Your Personal Exit Strategy. The first item of an exit plan checklist should always be about your goals post-exit.
Envision the kind of lifestyle you want in retirement, estimate the financial resources it will require, and create a personal exit strategy plan of action checklist.
What are the things that make an exit successful for you (personally and professionally)?
Write down your non-negotiables.
Step 2: Conduct a Business Value Assessment.
Prior to the valuation, prepare the documents required by the broker or advisory firm. Compile all operational workflows and information and organizational structure. Mitigate the risk by ensuring that the company is business as usual regardless of the presence of key persons within the organization.
Gather all your financial statements and clean all your books.
Engage with a business broker (for small businesses) or an advisory firm (for large companies) to ensure accuracy in your business value assessment. These professionals will not only look at your financials but also take into account the multiples determined by the current market situation.
Step 3: Develop a Comprehensive Business Transition Plan
Create a business exit strategy checklist that details how the transition phase will take place.
Determine your role within the company after the sale. Are you going to stay for a board or advisory position while rolling over equity? Will it be a complete exit without any involvement?
Assign tasks and roles to key employees and define their responsibilities after the sale.
How will you communicate with your stakeholders, employees, suppliers, and customers? Explain how the transition will take place, express your support, and determine how you’ll answer concerns about the sale of the company.
Step 4: Create a Succession Planning Checklist
Analyze exit options by researching potential strategies, comparing internal and external succession paths, and evaluating the feasibility of a management buyout.
Develop successors by identifying potential candidates, creating tailored training plans, and setting clear performance metrics to guide their readiness.
Step 5: Address Legal and Financial Preparedness
Strengthen legal preparedness by reviewing and updating contracts, ensuring all compliance documents are in order, and resolving any outstanding legal issues that could affect the bottom line or prevent the sale from happening.
Create a tax-efficient exit strategy that also aligns with your exit plan. Factor in estate planning considerations and review the structure of retirement accounts. This is best discussed with a CPA.
Step 6: Closing a Business Checklist (if applicable)
If selling or transferring ownership isn’t feasible, closing the business through asset liquidation may be the most practical way to settle debts.
Gradual liquidation allows you to sell assets over time while still earning income, but it can strain relationships with investors and limit the company’s future value.
A rapid closure and asset sale offer a quicker resolution, but market value may be compromised, and large one-time gains could result in higher taxes.
In either approach, creditors must be paid before any remaining funds go to you as the owner.
Implementing Your Exit Strategy Steps
Engaging Advisory Teams for Support
The right advisory team can make all the difference when selling a company. Choose experts like an experienced M&A advisor, attorney, accountant, and other key professionals who understand the nuances of your industry or niche you operate in.
It’s especially important to choose brokers and appraisers who have successfully closed deals in your specific field, because they’ll know the correct valuation multiples to apply. Without that industry-specific insight, your business could end up being priced incorrectly, compromising your financial outcome.
Communicating with Stakeholders
Once your exit plan is solid, let your stakeholders and investors be the first to know. Be ready to walk them through your decision and address any concerns they might have. Have a clear plan for how they’ll be repaid, and back it up with a solid grasp of your numbers—investors will want to see that you’ve thought things through.
Finalizing Your Exit Plan Checklist
For all these exit strategy steps to be effective, a business owner needs to understand that some parts are a recurring process. For example, if you are in the early stages of your exit, you need to implement procedures that will improve the market value of your company.
Reviewing and Adjusting Your Strategy
Go over this checklist every quarter and refine your strategy as things evolve. To keep things moving forward:
Every item on the checklist should have a set deadline
Delegate responsibilities to team members or trusted advisors
Hold regular check-ins to stay on track
Track your progress and tweak timelines when necessary
Conclusion and Next Steps
Your exit planning journey begins with a single, intentional step. Start by tackling the areas where you can make quick progress while also laying the groundwork for more complex, long-term strategies.
This checklist serves as a guide, but no two businesses are exactly alike. That’s why partnering with an experienced team is essential to tailor the process to your unique needs and ensure every important detail is covered.
For internet-based businesses, WebsiteClosers.com is a trusted partner that offers deep expertise in selling online companies and helps you navigate the path to a successful exit. Contact us today!
