By Gary Smith

What if?  How will that person feel?  How do I feel?  What would I do?  Can they handle it?  How will I deal with that person when they find out?  Is this the right time?  What if they don’t?  Is there enough money?  Why would they do that?  How would they do that?  Why stir the pot now?  Anyway, we really need to deal with this other issue, which seems more important because I know how to handle it.

Worry.  Anxiety.  Fear.  Exhaustion.  Indecision.  Difficulty.  Uncertainty.  Change.  People.  Life.  Many things can come between an owner and an exit plan.  It’s not just time and taxes.

Business owners are hit with articles, speeches, self-help books, advisors, other owners, and many other sources telling them what’s most important to do first.  Before you can blink, you’ve got to act.  The owner has to figure out the vision for the business, find the right people, get the right mission statement, be sure the right people are doing the right things, maintain a culture, have an open door, delegate, balance life, plan, and do it all in as few hours each week as possible.  And this is just to get the business started.

Now, people are asking about the future.  They want to know what advancement opportunities they have.  They wonder about how quickly direct deposits clear.  They want to know about the strategic plan.  They want to know your plan.  You want to know the specifics about cash, receivables, and payables daily.  Wait.  You just turned; how old?  That can’t be right.

Business owners have a lot going on all the time.  They work “on the business” and “in the business.”

STOP, Breathe, You’ve Got This

Let’s make it simple.  There will most likely be two exit plan options to consider for tax purposes, depending on the structure you want.  One of the options involves putting a set plan in place today with no flexibility.  The second option involves deciding what you want to do each year, if anything.  Those are the two extremes.  Part of our job as an advisor is to help you navigate the extremes to the plan you want.  Don’t try this at home.

How to Start the Exit Planning Process

Here are the typical steps in the process we at Venn Law Group recommend:

1. We ask the owner for specific information about the business that we can review before speaking with the owner.
2. We talk with the owner to understand the owner’s goals and concerns.
3. We speak with the potential successor(s) separately to understand the successor’s goals and objectives and what the successor is willing to do. We recommend doing this separately without the owner’s presence, as the potential successor may be more candid than if the owner was present.
4. We take all the comments and create a proposed structure for the owner to consider.
5. Once the owner is satisfied with the structure, we present it to the potential successor for review and comment. We present this as our idea for feedback; we don’t present it as what the owner is willing to do.
6. We provide feedback to the owner and propose revisions to the structure based on the successor’s comments.
7. We present the revised structure the owner approves to the potential successor for the successor’s review and comments.
8. We review the successor’s comments with the owner and set a time for everyone to meet about the structure and comments.
9. Once everyone agrees on a final structure, we draft the documents needed to implement the structure.

The process’s length depends on the owner and the potential successor(s).  As I’ve noted, finding 48 hours to work on the plan may take a year.

In some cases, we don’t go past step 3.  This happens when the potential successor(s) isn’t (aren’t) ready or potentially able to take over the business.  We provide any concerns we have to the owner after step 3.

Also, in some cases, the potential successor(s) think selling the company by the owner is the best option. While the successor may be excited and able to take over the business, they may not be comfortable with their ability to find and train the next successor(s).

In every case, you clearly understand what you need to do next to move forward with the plan you want (or need).

But what if you don’t want to retire or know what that looks like?  What if you don’t want to go through the process and decide on a plan for another ten years?

Navigating the complexities of exit planning can feel overwhelming, but with the right guidance and a clear process, you can create a plan tailored to your needs and goals. Remember, starting today doesn’t mean rushing decisions. It means taking control of your future, one step at a time. Whether you’re considering options for succession, business continuity, or long-term growth, there’s a path forward that ensures both your peace of mind and the stability of your business. For more insights, don’t miss our next blog, where we explore business continuity planning and how to keep your legacy thriving for years to come.

Gary W. Smith has over 20 years of experience providing legal counsel and innovative solutions to business owners and management teams. His focus areas include mergers and acquisitions, succession and exit planning, securities and capital structures, business structures, and tax. He excels at navigating the legal complexities of diverse industries ranging from professional services and IT infrastructure to manufacturing and real estate.