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Business exit plan & strategy checklist | a complete guide.

Jacob Orosz Portrait

Executive Summary It’s not enough to merely hand over the keys at the closing. You need a strategy. An exit strategy. An exit strategy, as the term implies, is a plan to assist you in exiting your business. All exit plans will vary, but they all contain common elements. The three common elements that all business exit strategies should contain are: A valuation of your company.  The process of valuing your company involves three steps, the first being an assessment of the current value of your business. Once this value is calculated, you should plan how to both preserve and increase that value. Your exit options.  After you have determined a range of values for your company and developed plans for preserving and increasing this value, you can begin exploring your potential exit options. These can be broken down into inside, outside, and involuntary exit options. Your team.  Finally, you should form a team to help you prepare and execute your exit plan. Your team can consist of an M&A advisor, attorney, accountant, financial planner, and business coach. If you are considering selling your business in the near future, planning for the sale is imperative if you want to maximize the price and ensure a successful transaction. This article will give you a solid understanding of these elements and how you can put them together to orchestrate a smooth exit from your business.

Business Exit Plan Strategy Component #1: Valuation

Your exit strategy should begin with a  valuation, or appraisal,  of your company. The process of valuing your company involves three steps, the first being an assessment of the current value of your business. Once this value is calculated, you should then plan how to both preserve and increase the value of your business.

Let’s explore each of these components — assess, preserve, increase — in more depth.

Assess the Value

The first step in any exit plan is to assess the current value of your business.

Here are questions to address before beginning a valuation of your company:

  • Who  will value your company?
  • What methods  will that person use to value your company?
  • What form  will the valuation take?

Who:  Ideally,  whoever values your company should have real-world experience buying and selling companies , whether through business brokerage, M&A, or investment banking experience. They should also have experience selling companies comparable to yours in size and complexity. Specific industry experience related to your business is helpful, but not essential, in our opinion. There are loads of professionals out there who possess the academic qualifications to appraise your business but who have never sold a company in their lives. These individuals can include  accountants or CPAs,  your financial advisor, or business appraisers. It is essential that your appraiser have real-world M&A experience. Without hands-on experience buying and selling companies comparable to yours, an appraiser will be unprepared to address the myriad nuances of the report or field the dozens of questions that will arise after preparing the valuation.

Action Step:  Ask whoever is valuing your business how many companies they have sold and what percentage of their professional practice is devoted to buying and selling businesses versus other activities.

What Methods:  Most business appraisers perform business valuations for legal purposes such as divorce, bankruptcy, tax planning, and so forth. These types of appraisals differ from an appraisal prepared for the purpose of selling your business.  The methods used are different , and the values will altogether be different as well. By hiring someone who has real-world experience selling businesses, as opposed to theoretical knowledge regarding buying and selling businesses, you will work with someone who will know how to perform an appraisal that will stand the test of buyers in the real world.

Form:  Your M&A business valuation can take one of two forms:

  • Verbal Opinion of Value:  This typically involves the professional spending several hours reviewing your financial statements and business, then verbally communicating an opinion of their assessment to you.
  • Written Report:  A written report can take the form of either a “calculation of value” or a “full report.” A calculation of value cannot be used for legal purposes such as divorce, tax planning, or bankruptcy, but for the purpose of selling a business, either type is acceptable.

Is a verbal or written report preferable? It depends. A verbal opinion of value can be quite useful if you are the sole owner and you do not need to have anyone else review the valuation.

The limitations of a verbal opinion of value are:

  • If there are multiple owners, there may be confusion or disagreement regarding an essential element of the valuation. If a disagreement does arise, supporting documentation for each side will be necessary to resolve the disagreement.
  • You will not have a detailed written report to share with other professionals on your team, such as  attorneys , your accountant, financial advisor, and insurance advisor.
  • The lack of such a detailed report makes it difficult to seek a second opinion, as the new appraiser will have to start from scratch, adding time and money to your process.

For the reasons above, we often recommend a written report, particularly if you are not planning to sell your business immediately.

We have been involved in situations in which CPA firms have  valued a business  but had little documentation (one to two pages in many cases) to substantiate the basis of the valuation.

In one example, the CPA firm’s measure of cash flow was not even defined; it was simply listed as “‘cash flow.” This is a misnomer as there are few agreements regarding the technical definition of this term. As a result, any assumption we might have made would have led to a 20% to 25% error at minimum in the valuation of the company. By having a written report in which the appraiser’s assumptions are documented, it is simple to have these assumptions reviewed or discussed.

Note:  When hiring someone to value your company, you are paying for a professional’s opinion but keep in mind that this opinion may differ from a prospective buyer’s opinion.  Some companies have a narrow range of value (perhaps 10% to 20%), while other companies’ valuations can vary wildly based on who the buyer is, often by up to 100% to 200%.  By having a valuation performed, you will be able to understand the wide range of values that your company may attain. As an example, business appraisers’ valuations often contain a final, exact figure, such as $2,638,290. Such precision is misleading in a valuation for the purpose of a sale. We prefer valuations that result in a more realistic price range, such as $2,200,000 to $2,800,000. An experienced M&A professional can explain where you will likely fall within that range and why.

Preserve the Value

Once you have established the range of values for your company, you should develop a plan to “preserve” this value. Note that preserving value is different from increasing value. Preserving value primarily involves preventing a loss in value.

Your plan should contain clear strategies to prevent catastrophic losses in the following categories:

  • Litigation:  Litigation can destroy the value of your company. You and your team should prepare a plan to mitigate the damaging effects of litigation. Have your attorney perform a legal audit of your company to identify any concerns or discrepancies that need to be addressed.
  • Losses you can mitigate through insurance:  Meet with your CPA, attorney, financial advisor, and insurance advisor to discuss potential losses that can be minimized through intelligent insurance planning. Examples include your permanent disability, a fire at your business, a flood, or other natural disasters, and the like.
  • Taxes:  You should also meet with your CPA, attorney, financial advisor, and tax planner to  mitigate potential tax liabilities.

Important:  The particulars of your plan to preserve the value of your company also depend on your exit options, which we will discuss below. Many elements of your exit plan are interdependent. This interdependency increases the complexity of the planning process and underscores the importance of a team when planning your exit.

Only after you have taken steps to  preserve  the value of your company should you begin actively taking steps to  increase  the value of your company.

Increase the Value

There is no simple method or formula  for increasing the value of any business.  This step must be customized for your company.

This plan begins with an in-depth analysis of your company, its risk factors, and its growth opportunities. It is also crucial to determine  who the likely buyer of your business will be . Your broker or M&A advisor will be able to advise you regarding what buyers in the marketplace are looking for.

Here are some steps you can take to increase the value of your business:

  • Avoid excessive customer concentration
  • Avoid excessive employee dependency
  • Avoid excessive supplier dependency
  • Increase  recurring revenue
  • Increase the size of your repeat-customer base
  • Document and streamline operations
  • Build and incentivize your management team
  • Physically tidy up the business
  • Replace worn or old equipment
  • Pay off equipment leases
  • Reduce employee turnover
  • Differentiate your products or services
  • Document your intellectual property
  • Create additional product or service lines
  • Develop repeatable processes that allow your business to scale more quickly
  • Increase  EBITDA or SDE
  • Build barriers to entry

Note:  A professional advisor can help you ascertain and prioritize the best actions for your unique situation to increase the value of your business. Unfortunately, we have seen owners of businesses spend three months to a year on initiatives to increase the value of their business, only to discover that the initiatives they worked on were unlikely to yield any value to a buyer.

Business Exit Strategy Component #2: Exit Options

After you have determined a range of values for your company and developed plans for preserving and increasing this value, you can begin exploring your potential exit options.

Note:  These steps are interdependent. You can’t determine your exit options until you have a baseline valuation for your company, but you can’t prepare a valuation for your business until you have explored your exit options. A professional can help you determine the best order to explore these steps, or if the two components should be explored simultaneously. This is why real-world experience is critical.

All exit options can be broadly categorized into three groups:

  • Inside:  Buyer comes from within your company or family
  • Outside:  Buyer comes from outside of your company or family
  • Involuntary:  Includes involuntary situations such as death, divorce, or disability

Inside Exit Options

Inside options include:

  • Selling to your children or other family members
  • Selling to your business to your employees
  • Selling to a co-owner

Inside exits require a professional who has experience dealing with family businesses, as they often involve emotional elements that must be navigated and addressed discreetly, gracefully, and without bias. Inside exit options also greatly benefit from tax planning because if the money used to buy the company is generated from the business, it may be taxed twice. Lastly, inside exits also tend to realize a much lower valuation than outside exits. Due to these complexities, most business owners avoid inside exits and choose outside options. Fortunately, most M&A advisors specialize in outside exit options.

Outside Exit Options

Outside exit options include:

  • Selling to a private individual
  • Selling to another company or  competitor
  • Selling to a financial buyer, such as a private equity group

Outside exits tend to realize the most value. This is also the area where business brokers, M&A advisors, and investment bankers specialize.

Involuntary Exit Options

Involuntary exits can result from death, disability, or divorce. Your plan should anticipate such occurrences, however unlikely they may seem, and include steps to avoid or mitigate potential adverse effects.

Business Exit Strategy Component #3: Team

Team members.

Finally, you should form a team to help you plan and execute your exit plan. Many of these steps are interdependent — they are not always performed sequentially, and some steps may be performed at the same time. Forming a team will help you navigate the options and the sequence.

Your team should involve the following:

  • M&A Advisor/Investment Banker/Business Broker:  If you are considering an outside exit.
  • Estate planning
  • Financial planning
  • Tax planning, employee incentives, and benefits
  • Family business
  • Accountant/CPA:  Your accountant should have experience in many of the same areas as your attorney, along with audit experience and retirement planning. Again, it is unlikely that your CPA possesses all of the skills you need. If further expertise is needed, the CPA should be able to access the skills you need, either through colleagues at their firm or by referral to another accountant.
  • Financial Planner/Insurance Advisor:  This team member is critical. We were once in the late stages of a sale when the owner suddenly realized that, after deducting taxes, his estimated proceeds from the sale would not be enough to retire on. An experienced financial planner can help with matters like these. They should have estate and business continuity planning experience, as well as experience with benefits and retirement plans.
  • Business Coach:  A business consultant or coach may be necessary to help implement many of the changes needed to increase the value of your business, such as building infrastructure and establishing a strong, cohesive management team. Doing this often requires someone who can point out your blind spots. A coach can help you take these important steps.

Where to find professionals for your team

The best way to find professionals for your team is through referrals from trusted friends and colleagues who have personally worked with the professional in question. Don’t ignore your intuition, however. It’s important that you and your team members have good chemistry.

The Annual Audit

We recommend that you assemble your professional advisors for an annual meeting to perform an audit of your business. The goal of this audit is to prevent and discover problems early on and resolve them. As the saying goes, “An ounce of prevention is worth a pound of cure.”

Your advisors are a valuable source of information. This annual meeting is an opportunity to ensure that they’re all on the same page and that there are no conflicts among your legal, financial, operational, and other plans. An in-person or virtual group meeting enables you to accomplish this quickly and efficiently.

A sample agenda might include a review of the following:

  • Your operating documents
  • New forms of liability your business has assumed
  • Any increase in value in your business and changes that need to be made, such as increases in insurance or tax planning
  • Capital needs
  • Insurance requirements and audit, and review of existing coverages to ensure these are adequate
  • Tax planning — both personal and corporate
  • Estate planning — includes an assessment of your net worth and business value, and any needed adjustments
  • Personal financial planning

If you are contemplating selling your business, creating an exit plan will answer these critical questions:

  • How much is my business worth? To whom?
  • How much can I get for my business? In what market?
  • How much do I need to make from the sale of my business to meet my goals?

Taking the strategic steps discussed in this article — assembling a stellar professional team and optimizing the team’s collective experience — will get you well on your way toward successfully selling your business and turning confidently toward your next adventure.

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How to Develop a Business Exit Strategy [+ Templates]

How to Develop a Business Exit Strategy [+ Templates]

Written by: Idorenyin Uko

How to Develop a Business Exit Strategy for Your Business [Including Templates]

No matter how successful your business is, you should plan for the day you move on from the start. At some point, you’re going to either sell or retire and pass it on to a successor.

However, most owners need to be more knowledgeable when it comes to exiting their business. William Buck’s 2019 Exit Smart Survey Report shows that about 53% of entrepreneurs don’t actually have an exit strategy in place.

An exit strategy defines how you will exit your business, providing guidance on how to sell your company or handle financial losses if it fails. In addition, it gives you a clear direction on what steps to take to ensure a successful transition.

This article will take a deep dive into how to develop a business exit strategy for your company. We’ll also share customizable templates you can use along the way.

Table of Contents

What is a business exit strategy, benefits of an exit strategy, 8 templates to support your business exit strategy, types of exit strategies, how to develop a business exit strategy, when to use an exit strategy, business exit strategy faqs.

  • An exit strategy for a business is a plan created by an investor or business owner to transfer ownership of the company or shares to another investor or company.
  • Having an exit strategy helps you make better decisions, amplifies your ROI, makes your business attractive to investors and ensures smooth transitions.
  • The main types of exit strategies are mergers & acquisitions (M&A), selling your stake to a partner or investor, family succession, acquihires, management and employee buyouts, leveraged buyouts, initial public offering (IPO), liquidation and bankruptcy.
  • Follow these steps to develop a business exit strategy: determine when you want to leave, define what you want to achieve, identify potential buyers or successors, evaluate and increase the current value of your business and assemble the right team.
  • Write an exit plan, create a communication plan, develop a contingency plan and build a data room.
  • Visme provides templates for creating a robust business exit strategy , checklist, investor pitch, succession plan, press release, communication plan and more.

A business exit strategy is a strategic plan for a business owner, trader, investor or venture capitalist to sell their company or shares to another company or investor. Having a deliberate exit strategy helps owners generate maximum value from liquidating their assets.

In cases where the business is unsuccessful, an exit plan helps the owner reduce losses or transfer them to another party. A venture capitalist may also utilize an exit strategy to prepare for a cash-out of their investment.

Common exit strategies include initial public offering, mergers and acquisitions, liquidation, management or employee buyout and transfer to a successor.

Exit Strategy Options: Closing vs Selling

When weighing your exit options, you're going to have to choose between selling to a new owner or closing the business.

Selling to a new owner is a win-win. You'll make money while the buyer can start operations without a huge upfront investment. If there's a financing agreement, the buyer can spread the payment over a period of time. However, the downside of selling is that employees may be affected.

The second option is closing shop and selling assets as quickly as possible. While this method is simple and quicker, the proceeds only come from the sale of assets. These may include real estate, inventory and equipment. Also, if you have any creditors, the funds you generate must be paid to them before you can pay yourself.

Planning a complete exit strategy well before its execution does more than prepare for unexpected circumstances; it builds purposeful business practices and focuses on goals.

Even though a plan may not be used for years or decades, developing one benefits business owners in the following ways:

  • Making Strategic Business Plans and Decisions: With an exit in mind, you will be more likely to set goals and make strategic decisions toward your expected business outcomes.
  • Maximizing Your Return on Investment: When it comes to exiting, timing is key. Having a business plan exit strategy enables you to sell when market conditions are favorable, amplifying your ROI.
  • Making Your Business More Attractive to Investors: Potential buyers value businesses with planned exit strategies because they demonstrate a commitment to long-term sustainability.
  • Working Towards Business and Professional Goals: Executing an exit strategy that increases your business’s value and potential can prevent negative consequences of exiting, like bankruptcy.
  • Revealing the Best Selling Situation: Planning your exit strategy requires an in-depth analysis of finances, market dynamics, competition and positioning. This helps you value your business and understand the best-selling situation.
  • Ensuring a Smooth Transition: Exit strategies outline all roles and how they contribute to operations. With every employee and stakeholder informed about their responsibilities and actions, transitions are smooth and predictable. You can minimize disruption and maintain continuity during times of change.
  • Implementing an Effective Succession Plan: For business owners, an exit strategy can be a part of company succession planning . This ensures a smooth transition of ownership or management. Be it to family members, existing partners, or external parties.

Executing a business exit strategy involves many moving parts. By using templates, you can effectively articulate your plan and ensure nothing slips through the cracks.

Keep in mind that you can tailor these to suit different industries, business sizes and exit goals.

Company Exit Strategy Presentation

exit plan for small business

When approaching investors or stakeholders to share your exit intent, you need a pitch deck. And we’re not just talking about “run-of-the-mill” decks. Use this orange-themed, captivating exit strategy template to wow investors and stir their excitement about the deal.

This presentation helps you explain what your business is about, how much you’ve grown, what you’ve achieved and the team behind the dream. It also paints a positive picture of the future. This business exit plan template utilizes charts, widgets and data visualizations to capture the timeline, traction and financing in an engaging way.

Do you have more evidence to support your presentation? You can link to your valuation, financial, legal and operations documents using Visme’s interactive features .

If you're racing against the clock and need to create your presentation quickly, use Visme's AI presentation maker . Input a detailed prompt, choose your preferred design and watch the tool produce your presentation in seconds. You also have the freedom to customize text and design with the extensive array of features and tools in Visme's editor.

Business Exits Checklist

MandA Due Diligence Checklist

Business exits (or even mergers and acquisitions) are complex. Without a checklist, you could miss out on some key steps. This business exit strategy checklist is a must-have if you want to increase your likelihood of success. It covers various aspects, from financial readiness and legal compliance to communication strategies and post-exit planning.

Think of it as a roadmap with essential steps and considerations to help you achieve a smooth and successful exit. Feel free to use it as is or customize it with the help of Visme’s intuitive editor. When working on this business exit plan template, you can change fonts, text and background colors to fit your branding.

Business Exit Strategy

exit plan for small business

Use this strategic plan template as a framework to guide you throughout the business exit journey. It captures all the key components of an exit strategy, helping you decide what’s best for your business.

Use it as a guide to navigate various aspects such as financial planning, market analysis and stakeholder communication.

Since multiple stakeholders are involved in the exit planning process, this exit strategy for business can serve as a collaborative tool. With Visme’s collaboration feature , team members can contribute to and review it individually or in real time. (Check out the video below to see how it works.)

The best part is that you can even deploy the Workflow tool for better task management among stakeholders. You can assign different sections, set deadlines, track progress and make corrections—all in one place.

Merger Press Release Templates

exit plan for small business

Announce your company's recent merger in a polished and professional manner using this blue-themed template. It features dynamic content blocks where you can easily place your text and visual elements.

The blue mixed with a yellow sprinkle makes your news visually appealing and engaging. Leave a lasting impression on your audience with visuals of your product or team members.

The best part of using Visme? You can generate content ideas or drafts for your press release using Visme’s AI Writer . The tool also comes in handy for proofreading your press release.

You can replicate or customize this merger press release for different channels using the Dynamic Fields feature .

Ownership Succession Plan

Ownerships Succession Plan

An ownership succession plan is critical for the success and stability of any business. Craft a well-structured plan for transferring ownership with this ownership succession plan template.

This customizable template addresses every aspect of the transfer process, like ownership structure, transition timeline and financial implications. It also captures an ownership checklist, a succession plan for retirement, a consideration sheet and a successor development plan.

Use this document to facilitate effective communication among stakeholders, including the owner, management, board of directors and employees.

Edit this template to align with your brand identity and maintain a smooth operational flow during the transition. Feel free to beautify the document with icons , stock photos and videos from Visme’s library. You also have the option of generating unique visuals with Visme’s AI image generator .

General Due Diligence Report

General Due Diligence Report

Give your business a huge advantage on the negotiation table with this general due diligence report template. Presenting a stunning report makes your business more attractive to potential buyers. It also eliminates surprises during negotiations and expedites the overall deal execution process.

This report presents a clear picture of the company's assets, liabilities, financial performance and growth prospects. It also captures information about your company’s legal and regulatory compliance, operations and team.

After publishing your report, you can monitor traffic and engagement with the Visme analytics tool . It provides insights into your report’s views, unique visits, average time, average completion and more. Monitoring how readers consume the report will help you steer your conversations in the right direction.

Financial Due Diligence Report

Financial Due Diligence Report

​​Instill confidence in potential buyers, investors and other stakeholders with this financial due diligence report. It paints a clear picture of your company’s financial health, controls and systems. This template covers key sections like the company overview, financial analysis, income statement, taxation analysis and recommendations.

The beautiful thing about creating this report in Visme is that you don't have to type in your financial figures manually. You can easily connect to third-party sources and import financial information into your report. As you make changes to your data, your table or chart will also be updated in real-time.

Download this template to share with your recipient in different formats, including PDF, HTML, video and image. Or simply generate a shareable link for online sharing. This means you can cater to different reading preferences–whether print or digital.

Legal Due Diligence Report

Legal Due Diligence Report

Establish compliance with all relevant laws and regulations associated with the transaction with this report template. It offers both the buyer and seller an extensive understanding of the exit process. This report captures key sections, such as:

  • Legal and regulatory compliance
  • Privacy and data sharing
  • Terms of Service and Licensing
  • Data retention

With this report, you can identify potential legal risks and liabilities. Not only does it ensure a smoother exit process, but it also helps you make better decisions.

Keep your report on brand with Visme’s brand wizard . Just input your URL; the tool will pull in your brand assets and recommend branded templates. You don't have to manually import them into the Visme editor.

Whether you're mapping out a business strategy or creating a plan for a business exit, we’ve created this ultimate list of strategic planning examples and templates to help you.

There are eight major examples of exit strategies for entrepreneurs, startups and established businesses.

Made with Visme Infographic Maker

 Ultimately, the strategy you select will depend on your own financial, personal and business goals. We’ll also touch on some of the pros and cons of each.

Merger and Acquisition (M&A)

This business exit strategy example involves merging with or selling your company (or a portion) to another company. The acquiring company may be a competitor, a supplier, a customer or a private equity firm. If you’ve built a strong brand, technology, or customer base, a Merger and acquisition exit strategy can provide an attractive exit option for your company.

  • Creates economies of scale and increases efficiency by combining resources and capabilities.
  • Enhances competitiveness and market position through expanded offerings and increased market share.
  • Provides access to new markets, technologies and talent.
  • Generates synergies and cost savings through combined operations.


  • Integration challenges and cultural differences can lead to significant difficulties in realizing expected benefits.
  • High transaction costs and significant investment are required.
  • Risk of overpaying for the acquired company or assets.
  • Potential loss of focus on core business activities during integration.

Streamline your M&A exit strategy with the help of this customizable template. It captures every aspect of the transition process, including assessment, preparation, valuation and negotiation.

Merger and Acquisition Exit Strategy Plan

Exit Strategies for a Partner or Investor

Selling your stake to a partner or investor can be a strategic exit plan, particularly if you are not the sole business owner. In this shareholder exit strategy, you have the opportunity to sell your stake to a familiar entity, often referred to as a 'friendly buyer,' such as a trusted partner or a venture capital investor.

  • Allows the business to continue operating smoothly with minimal disruption to daily activities, ensuring a consistent flow of revenue.
  • A 'friendly buyer' already has a vested interest in the business and a commitment to its long-term success. This can contribute to the ongoing stability and growth of the company.
  • Identifying a suitable buyer or investor for your share of the company can be a challenging task.
  • When selling to someone with a close relationship, personal ties may influence negotiations. Hence, the process may not be as objective as with an external party.
  • The close relationship with the buyer may make you lower the asking price.

Family Succession Exit Strategy

This exit strategy for a small business involves passing ownership and leadership of a business from one generation to the next within a family.

  • Maintains the business's legacy and continuity with a sense of tradition.
  • Successors often deeply understand the business because of their long-term affiliation.
  • The successor’s familiarity with existing relationships, suppliers and customers can contribute to the business’s stability during the transition.
  • Family dynamics can lead to conflicts of interest and an inability to make impartial business decisions.
  • Successors may lack the necessary skills or experience to steer the business.
  • Non-family employees may perceive favoritism or a lack of equal opportunities, causing dissatisfaction within the workforce.
  • Narrow-mindedness within the family may hinder the introduction of new ideas and innovations.

Acquihires Exit Strategy

For this exit strategy in business, a larger company acquires a smaller company primarily for its talent and intellectual property. This allows acquiring companies to easily tap into the experience and expertise of skilled employees and innovative minds.

  • Acquiring a team with a proven track record mitigates some of the risks associated with starting a new project or entering a new market.
  • Provides a quick way for companies to onboard skilled and talented hires.
  • The acquired team brings fresh perspectives, ideas and innovations to the acquiring company.
  • Integrating a team already familiar with the industry can accelerate product development or market entry.
  • Merging different cultures may lead to conflicts and clashes that affect team morale.
  • Getting the acquired team acquainted with existing workflows and processes may present difficulties that impact productivity.
  • Acquihires can be expensive and there's no guarantee you'll successfully integrate the new team.

Management and Employee Buyouts (MBO)

An MBO occurs when the company's management team purchases a majority stake from existing shareholders. This exit strategy in entrepreneurship allows managers to take control of the business and make decisions without external interference. MBOs can motivate employees, align interests and facilitate succession planning.

  • Increased chance of success since the management team is already familiar with the company's operations, culture and challenges.
  • MBOs can provide continuity in leadership, ensuring a smooth transition without significant disruptions to daily operations.
  • Enable more agile decision-making processes for a smaller group of decision-makers.
  • F​​unding an MBO can be expensive. The management team may face difficulties raising the necessary capital to acquire the company.
  • MBOs may lack the financial resources and expertise that external investors or buyers could bring to the company.
  • Insiders may have a biased view of the company's value and potential, leading to overvaluation and unrealistic expectations.

Here's a template you can use to manage the transition process for your MBO exit strategy. The presentation template covers key aspects such as employee roles and ownership, the board’s role, the process, transition planning and management.

exit plan for small business

Leveraged Buyout (LBO)

An LBO is similar to an MBO but involves borrowing funds, equity and cash to finance the purchase. The assets of the purchased and acquiring companies are used as collateral for the loans. Private equity firms often use this method to acquire companies with the potential for high returns through financial leverage.

  • If the acquired company performs well, the return on the equity investment can be substantial.
  • LBOs allow investors to control a larger enterprise with less initial investment.
  • Private equity firms involved in LBOs often bring operational expertise and efficiency.
  • Private equity ownership supports strategic decision-making since the ownership structure is often less bureaucratic.
  • If the acquired company's performance declines or interest rates rise, the debt burden increases.
  • Capital structure of LBOs may limit the company's ability to generate cash for other purposes.
  • LBOs are influenced by market conditions and economic downturns can impact profitable investment exits.

Create a robust strategy plan for your leveraged buyout exit strategy using this template.

Leveraged Buyout LBO Strategy Plan

Initial Public Offering (IPO)

An IPO exit strategy is when a privately held company goes public by issuing stocks to raise capital. This provides an opportunity for early investors and shareholders to cash out their shares and realize a return on their investment. However, going public also means increased scrutiny, regulation and pressure to perform well.

  • Provides liquidity for existing shareholders, including founders and early investors.
  • Enhances the company's public profile and can attract new investors.
  • Preparing and executing an IPO can be an expensive and time-consuming process.
  • The company becomes subject to rigorous regulatory requirements and market fluctuations.

Considering how challenging executing an IPO is, this template is your trusted ally. The green fashion-themed design makes it visually appealing. The pictures bring more context to the company’s products or offerings. This strategy plan accounts for every single aspect of a successful exit via IPO, including objectives, the preparation phase, timing, IPO execution and post IPO.

Initial Public Offering IPO Exit Strategy Plan


Liquidation exit strategy involves winding down operations, selling off assets and distributing proceeds to shareholders. This option is usually considered when a company is no longer viable or has reached the end of its life cycle.

  • Compared to other exit strategies, liquidation is a simpler process.
  • Proceeds from liquidation can be used to settle outstanding debts, liabilities and other financial obligations.
  • Allows you to sell and realize value from individual assets rather than the entire business.
  • Often results in lower returns for shareholders compared to selling the business as a going concern.
  • The liquidation process, especially if it involves bankruptcy, can damage the reputation of the business and its stakeholders.
  • Assets can be sold below fair market value due to urgency.

Bankruptcy is a legal process where a company unable to pay its debts seeks protection from creditors. Depending on the circumstances, it can result in restructuring, refinancing or liquidation. While not always ideal, bankruptcy can provide relief and allow for a fresh start.

  • Provides a legal process for discharging or restructuring debts.
  • Triggers an automatic stay and offers legal protection from creditors.
  • Facilitates the orderly liquidation of assets. This ensures creditors get fair treatment and maximizes the value of assets for distribution.
  • Has a severe impact on the credit ratings of both the company and its owners.
  • The court takes control of the company's assets and may appoint a trustee to oversee the process.
  • Proceedings involve legal and administrative costs that can further erode the company's assets.
  • Often results in job losses and career disruptions for employees.

1. Determine When You Want to Leave

The first thing you should do when doing business exit planning is figure out how long you want to stay involved.

If it’s a voluntary exit, you can approach it in two ways. You can list goals that should be achieved before you exit or pick a date in the future and work towards it.

For example, you can decide to sell after hitting a certain milestone in revenue, profitability, growth, or liquidity. You can also determine whether you’ll proceed with the sale even if you don’t hit those targets.

The target date for this transition can change. But without a deadline, you won’t treat the plan with priority or commit resources to achieving it. Once you have a date, you can work toward making your business more valuable and attractive to potential buyers.

2. Define What You Want to Achieve

Ask yourself what you want to achieve from your exit strategy. These could be financial goals, legacy preservation or pursuing new opportunities.

Do you want to retire or will you pursue other opportunities? Do you still want to maintain control over the business? Are you hoping to preserve your legacy?

If you’re exiting a long-term business, succession planning or management buyouts may be your best bet. But if you’re looking to cash out or explore synergies, you can sell, merge or even launch an IPO.

3. Identify Potential Buyers or Successors

The potential buyer for your business will depend on your industry, financial performance, strategic fit, market position and other factors.

Create a profile of the type of investor that may be interested in acquiring your business.

For example, your buyer may be a bigger competitor or venture capital fund that can maximize value from your business model. It could also be a rival company that finds your new product line perfect for cross-sells. You may also be approached by rivals who want your intellectual property, staff or customer base.

The next step is to list businesses that fall into this category. If you're looking to sell your business, consider potential buyers who have expressed interest in your industry or have a track record of acquiring similar companies.

However, if you plan to pass your business down to family members, identify suitable candidates within your family who have the necessary skills and experience to run the business successfully.

4. Evaluate the Current Value of Your Business

The next step is to determine what your business is actually worth. This may involve a business valuation, considering factors like revenue, profits, assets, market position and growth potential.

We recommend hiring external auditing companies or professionals to value your business and conduct due diligence. Not only will you get a due diligence report , but you'll also get a transparent and impartial valuation of your finances.​​

Understanding your business's worth will help you set expectations for buyers and negotiate a fair deal.

In addition to valuing your business, do your due diligence. Organize all of your company and legal documents, including:

  • Permits/licenses
  • Employee data and payroll information
  • Vendor and customer contracts
  • Asset lists
  • Insurance information
  • Liabilities
  • IP documentation

5. Increase Business Value and Improve Performance

Now that you know the value of your business, what's next?

Ask yourself: Does it align with the exit strategy goals? Can I achieve my exit strategy goals with this current valuation? What can I do to increase the value of the business or make it more appealing to investors?

Keep finding areas for improvement across your business. This could involve expanding your product or service offerings, entering new markets or implementing new technologies.

Focus more on areas that will make other businesses want to acquire or merge with you. If you haven’t found those value drivers yet, it’s about time you did. Similarly, figure out the biggest drawbacks and fix them.

For example, if you have a strong financial track record, consistent profitability and positive growth trends, you’re likely to attract potential buyers. Your proprietary technology, patents, intellectual property, customer base, supplier relationship and geographic presence may just be the reasons other companies find your business valuable.

Another great practice to increase value is to do a competitor analysis. Analyze the competitors in your market. Where are they doing better than you? How can you beat them in their game? Acting on this intel can increase your chances of finding a suitable buyer and negotiating a favorable deal.

6. Assemble a Solid Team to Manage the Process

Buyers will come to the negotiation table with a solid team. You should assemble a great team as well.

You should also do this if you’re creating an exit strategy for startups.

When it comes to selling your business or liquidating shares, you’ll need professional guidance to navigate the complexities and emerge with confidence. The key is to surround yourself with trustworthy individuals who understand the intricacies of selling.

These professionals should have a proven track record and a wealth of knowledge to handle various situations associated with exits. Some professionals you should consider adding to your team include:

  • Accountants
  • Business brokers
  • Corporate lawyers
  • Merger and acquisition advisors
  • Financial experts
  • Marketing experts
  • Information and communication experts

7. Write an Exit Plan

Establish a succession plan that outlines how you’ll ensure business continuity. This should outline how leadership will be transferred, including a clear chain of command, roles and responsibilities and a timeline for the transition.

Once you’ve decided to exit your business, gradually remove yourself. If operations, revenues and survival are 100% tied to the owner, that becomes a red flag for buyers.

Choose new leadership and start transferring some of your responsibilities to them while you finalize your plans. Establish a set of standard operating procedures (SOPs), ideally in written form, that would enable any buyer to keep the business in gear by following a set of instructions.

If you already have a documented operation strategy, transitioning new responsibilities to others will become seamless.

Ultimately, your business exit plan should capture these elements:

  • Valuation of the business
  • Timeline for your exit
  • Financial preparedness
  • The most suitable exit strategy
  • General due diligence report
  • Post exit involvement (consultancy roles, advisory positions, or other forms of ongoing involvement)

We've shared dozens of business exit plan templates. Alternatively, you can create one in minutes using our AI document generator . 

8. Create a Communication Plan

Plan how and when you will communicate the exit to customers, employees and other stakeholders.

Create a communication plan to manage this process. It can minimize disruptions and maintain the confidence of key stakeholders.

Once you have established a solid succession plan, communicate this information to your employees. Be prepared to address any concerns or questions they may have. Notably, approach this communication with empathy and transparency so your employees feel heard and valued throughout the process.

Finally, inform your clients and customers. If your company will continue with a new owner, make the transition smooth by introducing them to your clients. However, if you are shutting down your business, point your customers to alternative options.

Here’s a communication plan you can use for this step.

Change Management Communication Plan

9. Develop a Contingency Plan

During the exit process, things could go south. For example, unexpected events—like market condition changes, delays or disputes with stakeholders—could impact the exit process.

That’s why you need a contingency plan to address these risks. Evaluate the potential impact and likelihood of each risk you’ve identified. Then, you can develop strategies to mitigate their effect.

Let’s say there’s a sudden change in market conditions. Your contingency plan could be to diversify your revenue streams or implement cost-cutting measures. Ensure the strategies are feasible, practical and aligned with the overall business goals.

10. Create a Data Room

The data room consolidates comprehensive information on financial results, key business drivers, legal affairs, organizational structure, contracts, information systems, insurance coverage, environmental matters and human resources issues such as employment agreements, benefits and pension plans.

As soon as the Confidential Information Memorandum (CIM) is drafted, start compiling information for the data room, as it supports much of the document.

It is important to balance the amount of information and the level of detail provided in the data room. The information should be sufficient to enable buyers to determine the asset's value and complete their due diligence.

However, it is equally important to limit the amount of sensitive or competitive information disclosed to anyone other than the ultimate purchaser. Achieving the right balance often requires discussions between sellers and their advisers.

There are different instances where you may need to use an exit strategy. Let’s look at a few of them.

  • Retirement: If a business owner is approaching retirement age, an exit strategy can help them plan for the transfer of ownership or sale of the business.
  • Profit Objective : An angel investor can sell their stakes and exit, achieving a specific profit objective.
  • Mergers and Acquisitions: If a business owner receives an offer to purchase their business, an exit strategy can help them negotiate the terms of the sale and ensure a smooth transition.
  • Financial Losses: An exit strategy is a great way to liquidate losses from a business with financial challenges or heavy debt burdens.

Other situations that can necessitate developing an exit strategy for startups and corporations include

  • Change in personal circumstances such as a divorce, illness, or death in the family.
  • Shift in business direction or industry changes.
  • Lack of growth opportunities.
  • Legal or regulatory issues.
  • Planning for succession or transition to new leadership.
  • Aligning with the investment horizon or expectations of investors or stakeholders.

Q. What Is the Best and Cleanest Way to Exit the Business?

The best exit strategy depends on your personal goals, financial needs and the specific circumstances of your business.

However, a clean exit can provide peace of mind and financial security. This type of exit involves a smooth transfer of ownership where you receive your payout and know your business will be left in capable hands.

With a clean exit, there’s little or no disruption to business operations. The owners maximize the value of their business and realize their financial goals.

Q. What is the Master Exit Strategy?

There isn't a single "master exit strategy" that universally applies to all businesses. Different businesses may benefit from different exit strategies. In addition, a small business exit strategy may not work for a larger company.

When exiting your business, deploy a strategy that helps you maximize your company's value and benefits all stakeholders.

Q. What Are the Two Essential Components of an Exit Strategy?

The two essential components of an exit strategy are:

A clear definition of the business owner's objectives: This includes identifying what the owner wants to achieve through the exit, such as maximum financial return, continued legacy, or minimal disruption to employees and customers.

A thorough assessment of the business's current situation: This includes evaluating the company's financial health, operational performance, market position and competitive landscape.

How Visme Can Equip Your Company & Team

There you go. This article has covered the basics of how to prepare an exit strategy.

Exiting a business you’ve built or invested in can be emotional and overwhelming. But doing it the right way pays off.

Planning a proper exit strategy in entrepreneurship requires diligence in terms of time and care. That’s why you need a tool like Visme that helps you manage the entire process—from planning to documentation to execution.

Visme provides templates for creating a robust business exit strategy , checklist, investor pitch, succession plan, press release and communication plan.

That’s just the tip of the iceberg regarding what you can create in Visme. With a rich library and cutting-edge features, teams can collaborate and create stunning business documents.

Sign up to discover how Visme can help you execute your business exit strategy.

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Exit Planning Explained - Process, Strategy, and More

If you are a business owner, you may have wondered what will happen to your business when you decide to retire, sell, or transfer it.

How will you ensure you get the best value while exiting the business? How will you protect the interests of your family, employees, customers, and other stakeholders?

In this guide, we will explain the exit planning process, the different types of exit strategies, and the role of advisors in the exit planning process. We will also provide tips and best practices for creating and executing a successful exit plan.

You may also want to look at a few success stories from our past clients for some inspiration before you start reading.

What is Exit Planning?

Exit planning is the process of preparing for the eventual transfer or sale of a business while considering the owner's personal and financial goals. It involves implementing various decisions and actions that enable a smooth and organized exit.

Exit planning is not a one-time event but a dynamic process that adapts to the business owner's and business's changing needs and circumstances. It requires a clear vision, proper assessment, and a strategic approach.

What Are The Benefits of Exit Planning?

Exit planning can benefit the business seller in many ways, from safeguarding their interests to facilitating a smooth deal when the time comes.

By planning ahead, the owner can increase the attractiveness and profitability of the business and reduce the risks and liabilities that may lower the business's value . The owner can also optimize the timing and structure of the exit and take advantage of the tax incentives and exemptions that may apply.

Business owners can ensure that their personal and financial goals are aligned with the goals and vision of the business and that they have a clear and realistic roadmap for achieving them.

One can anticipate and mitigate the potential challenges and obstacles that may arise during the exit process, such as legal disputes, regulatory issues, and emotional stress. They can also prepare for the transition and the future by securing their income, assets, and lifestyle and exploring new opportunities.

The owner can ensure the continuity and stability of the business by developing and retaining key employees and managers and transferring the knowledge and skills essential for the new ownership's success.

One can achieve a sense of accomplishment by exiting the business on their terms and conditions. The owner can also enjoy a smooth, stress-free exit and a rewarding and satisfying future.

Whether you are planning to exit your business in the near or distant future, exit planning is a vital step you should consider.

TL;DR - Overview of the Exit Planning Process

Exit planning is the process of preparing for the eventual transfer or sale of a business. It can be a planned event or arise from a contingency where a business owner wants to change ownership for some reason.

Developing a good exit plan that covers factors like tax compliance and stakeholder share is crucial, and a good M&A advisor can help both parties build terms and negotiate a fair deal.

What Role Do Advisors Play in the Exit Planning Process?

Rightly known as Certified Exit Planning Advisors, these professionals can provide expert advice and guidance to the business owner during exit planning. They can help the owner with various aspects of the exit planning process, such as:

Assessing the current situation and identifying the objectives and preferences of the owner

Exploring and evaluating the different exit strategies and options

Developing and implementing a customized and comprehensive exit plan that meets the needs and expectations of the owner

Coordinating with other advisors and stakeholders involved in the exit process

Monitoring and adjusting the exit plan as needed to respond to changing circumstances and opportunities

Exit planning advisors often work with a team of other professional who help in the process, who may include:

Accountants: They can help the owner with the financial and tax aspects of the exit, such as valuing the business, structuring the deal, minimizing the taxes and fees, and preparing the financial statements and reports.

Lawyers: Lawyers can help the owner with the legal aspects of the exit, such as drafting and reviewing the contracts and agreements, protecting the intellectual property and confidential information, resolving disputes and claims, and complying with the laws and regulations.

Brokers: They help with the marketing and selling aspects of the exit, such as finding and qualifying the potential buyers, negotiating the terms and conditions, facilitating the due diligence and closing, and maximizing the price and value.

Bankers: Bankers can help the party with the financing and funding aspects of the exit, such as securing the loans and equity or arranging escrow.

Consultants: They can help the owner with the strategic and operational aspects of the exit, such as improving the business's performance and sustainability.

Advisors can play a vital role in the exit planning process, providing the owner with the knowledge, skills, and resources necessary for a successful and satisfying exit. The owner should pick suitable advisors, maintain control and responsibility over the exit planning process, and make the best decisions for themselves and their business.

Exitwise can help you find the right advisors for your exit planning and build the right M&A team for a successful team. Check out our detailed explanation of how our process works and how we can help create your dream M&A team.

5 Key Steps in Developing an Exit Plan

Developing an exit plan helps you achieve your personal and financial goals and ensure a smooth and successful exit from your business.

Here are five key steps that you should follow to create and execute an effective exit plan:

Step 1: Establish Your Objectives

Identify your reasons and motivations for exiting the business and your desired outcomes and benefits. Consider your personal, financial, and professional goals and your family, lifestyle, and succession preferences.

Step 2: Determine the Value of Your Business

Estimate your business's current and potential value based on various valuation methods and market factors. Identify your business's value drivers, detractors, and the opportunities and threats that may affect the value. You can use our business valuation calculator for an accessible overview of your business's current value.

Step 3: Choose Your Exit Strategy

Explore and evaluate the different exit strategies and options available, such as selling, merging, passing, or liquidating the business. Weigh the pros and cons of each option and select the one that best suits your objectives, situation, and market conditions.

Step 4: Develop Your Exit Plan

Create and implement a comprehensive and customized exit plan outlining the specific actions and initiatives needed to execute your chosen strategy. Include a contingency plan, a timeline, and a budget for prompt execution.

Step 5: Execute Your Exit Plan

Execute your exit plan with the help of an exit planning advisor to ensure maximum compliance and value. Monitor and adjust your exit plan to respond to changing circumstances and opportunities and ensure success and satisfaction.

8 Exit Planning Strategies Explained

Check out these different exit strategies, and you may get an idea of what best suits your business.

1. Employee Stock Ownership Plan (ESOP)

A strategy where the owner sells some or all of their shares to a trust set up for the benefit of the employees. The employees become the business owners, and the owner receives cash and tax benefits. This strategy can be used to reward and motivate the employees and preserve the business's culture and legacy.

2. Merger with Another Business

In this arrangement, the owner combines their business with another business with complementary or synergistic assets, capabilities, or markets. The owner receives shares or cash from the merged entity and may retain some control or influence over the business. This strategy can create value for both parties and increase the chances of success in the future.

3. Management Buyout (MBO)

MBO is a strategy where the owner sells their business to the existing management team, who may use debt or equity financing to fund the purchase. The owner receives cash and may retain some equity or involvement in the business. This strategy can be used to transfer the ownership to the people who know the business best and to ensure continuity and stability.

4. Initial Public Offering (IPO)

IPO is a strategy where the owner sells some or all of their shares to the public through a stock exchange. The owner receives cash and may retain some ownership or control over the business. IPO strategy can raise capital and enhance the business's reputation and visibility.

5. Selling to a Third Party

Here, the owner sells their business to an external buyer, an individual, a group, or a company. The owner receives cash and may negotiate the terms and conditions of the sale. This strategy can be used to maximize the business's price and value and exit the business quickly and thoroughly.

6. Family Succession

The business owner transfers the ownership or control of the business to their family members, who may be their children, siblings, or relatives. The owner may receive cash, shares, or other assets from the family and maintain some involvement or influence in the business. This strategy can be used to preserve the business's legacy and culture and maintain ownership in the family.

7. Recapitalization

It is a strategy where the owner restructures the business's capital structure by changing the mix of debt and equity. The owner may use the debt or equity issuance proceeds to pay themselves a dividend or reinvest in the business. This strategy can increase the return on equity and prepare the company for a future exit.

8. Liquidation

In liquidation, the owner sells the assets and liabilities of the business and distributes the proceeds to themselves and other stakeholders. The owner may receive cash or other assets and terminate business operations. This strategy can be used when the business is no longer viable or profitable or when the owner wants to retire or pursue other interests.

What Are the Tax Implications of Different Exit Strategies?

Disclaimer: The information provided here is for general guidance only and does not constitute professional tax advice. You must consult a local tax professional before making any final decisions regarding tax matters.

The tax implications of different exit strategies can vary depending on the structure of your business, the nature of your exit, and the applicable tax laws. Here are some common exit strategies and their tax considerations:

Selling the Business

Selling your business can lead to capital gains and regular income taxes. Depending on how long you've held the business, capital gains may be classified as short-term or long-term, each with its tax rate. Additionally, you might be subject to depreciation recapture taxes if you've claimed depreciation deductions on your business assets.

Passing the Business to Heirs

Succession planning involves passing on your business to family members or other heirs. While this strategy can potentially lead to estate taxes, the tax implications can be minimized through careful planning, including using trusts and gifting strategies.

Liquidating the business

Closing down your business involves liquidating its assets and settling its liabilities. This process can trigger capital gains, ordinary income taxes, and potential taxes on any accumulated earnings in the business.

Merging or Acquiring

Mergers and acquisitions can lead to a range of tax implications, including taxes on gains from the sale of assets or stock, changes in ownership structures, and potential changes in tax attributes like net operating losses.

Exit Planning Statistics

Let’s look at some exciting findings from recent surveys and reports on exit planning statistics:

According to the BEI 2022 Business Owner Survey , 16% of business owners plan to exit their businesses in fewer than five years, 37% plan to exit within 5–10 years, and 47% plan to exit in more than ten years. When asked how the COVID-19 pandemic impacted their plans to exit, more than 50% said it made no impact. Only 11% said it made them want to exit their business sooner.

The EPI 2023 State of Owner Readiness Research report says that 52% of business owners include written detailed personal planning in their exit strategy, compared to only 9% in previous surveys. This indicates that owners consider exit planning earlier in their ownership lifecycle and expect their advisors to support those efforts.

Data from the Gitnux 2024 Succession Planning Statistics estimates that only 30% of small businesses successfully sell, leaving 70% without a buyer or successful plan for what happens next. The report also suggests that owners with a formal succession plan are more likely to achieve higher business value, lower taxes, and greater personal satisfaction.

Frequently Asked Questions (FAQs)

This comprehensive FAQ section will guide you through the answers to some common questions about exit planning.

When Should an Owner Start the Exit Planning Process?

Owners may have different objectives, timelines, intentions, and market conditions for their exit. However, a general rule of thumb is to start the exit planning process at least 3 to 5 years before the desired exit date. It allows enough time to assess the current situation, explore the options, develop and implement the plan, and execute the exit strategy. Starting the exit planning process early also helps increase the business value and reduce the risks and uncertainties.

How Does Exit Planning Affect Business Valuation?

Exit planning can positively impact the business valuation, as it can motivate the ownership to improve the business's performance and sustainability and enhance its attractiveness and profitability for potential buyers or investors. Exit planning can also optimize the exit's timing and structure and take advantage of the tax incentives and exemptions that may apply.

Can Exit Planning Help in Reducing Business Risks?

Exit planning can help reduce business risks, as it can help anticipate and mitigate the potential challenges that may arise during the exit process, such as legal and regulatory issues, market fluctuations, and operational disruptions.

Exit planning is a vital process for any business owner who wants to maximize the value of their business and achieve the best potential deal for their exit. There are various benefits of exit planning and several strategies to carry it out. It all depends upon the buyer's and seller's preferences and objectives.

Let us help you with your exit plan if you need more assistance. We will help you create a team of experienced and professional M&A advisors who can guide you through every step of the exit planning process. Contact us now to schedule a consultation .

Brian graduated from Michigan Technological University with a BS in Mechanical Engineering and as Captain of the Men's Basketball Team. After a four-year stint at Deloitte Consulting, Brian returned to school to get his MBA at the University of Michigan. Brian went on to join his first startup, a Ford Motor Company Joint Venture, and cofound a technology and digital marketing services agency. Through those experiences, Brian embraced the opportunity to provide M&A education and support to his fellow business owners as they navigated their own entrepreneurial journeys.

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    Exit planning is the process of preparing for the eventual transfer or sale of a business while considering the owner's personal and financial goals. It involves implementing various decisions and actions that enable a smooth and organized exit.