But if she has time on her side, she has a second option: she can create and execute a plan to increase the business value to the $10 million she needs to maintain her lifestyle. And if she’s able to boost that business value to $12 million, additional options open up. For example, without the need to collect the full market value, she could gift part of the business to her children or sell it to her employees at a discount. Or she could use some of the sale proceeds to fund a grandchild’s education or establish a charitable legacy.
It’s really never too early to start an exit plan, and both Sullivan and Baumbach point out that the more time you have, the better the outcome. “Selling a business—even one with all the value pieces in place—usually takes around 12 to 18 months,” said Sullivan. But most businesses don’t have all those pieces in place. And building value takes time. The ideal way to approach exit planning is to start thinking about it as soon as you launch your business, and then review your plan periodically from then on. But if you’ve missed the boat on that, at the very least you should start the process three to five years before you’ll need the proceeds.
Team Up For Success
A well-conceived exit plan will serve dual purposes: provide clear guidance for your strategic decisions during the life of your business and help ensure you achieve your financial goals once you are no longer at the helm. That’s why it’s valuable to have an integrated strategy that leverages the expertise of both an exit-planning specialist and a wealth advisor. Working as a team, advisors like Baumbach and Sullivan can help you think through important questions from multiple perspectives, and then partner with you to create a comprehensive plan that aligns with your priorities. “By working hand in hand from the very beginning, we help business owners achieve the outcomes they want,” said Baumbach. Sullivan added, “We know how much is riding on the plan, and how important it is to get each piece of it right.”
Kelly Baumbach, CFP, CEPA, is managing director at Wealthspire Advisors, where she serves high-net-worth investors and business owners. She can be reached at [email protected].
Martha Sullivan, CPA, CEPA, CVA/ABV, CVGA is the founder and president of Provenance Hill Consulting, where she helps business owners grow value and sustainability through strategic business and exit planning, management coaching, business valuation, accounting, and due diligence. She can be reached at [email protected].