What Will Happen To Your Business When You Leave?

Paul G. DiNardo CPA

Designing a comprehensive exit plan — based on your exit objectives and flexible enough to adapt to changing economic, business and personal circumstances — can be the difference between liquidating your company and selling or transferring it for millions of dollars.

Let’s look at the characteristics of a good exit plan in light of a sad, but common story of two hypothetical business owners who failed to plan.

Several years ago, I met with Jim and Tim McCoy, the owners of a thriving construction company. What I assumed would be a business-planning meeting turned into a “We-are-getting-out-of-business-so-how-do-we-do-it?” meeting. As successful as they were, the McCoys were tired of navigating the labyrinth of government regulation and of paying ever-increasing taxes. Ultimately, the day-to-day grind of running a multi-million dollar company had taken its toll.

For the McCoys, a sale to a third party was not feasible not only because neither brother was willing to remain with the company after a sale, but also because they had failed to develop a strong management team. Few savvy buyers will purchase a company without a great management team committed to remain after the sale.