Exit Planning for Business Owners

Financial Readiness Before You Sell

Before you negotiate price, you need to know how much you actually need.

We build a financial plan that clarifies your walk-away number. This removes the emotional trap of “I need as much as possible” and gives you the freedom to recognize the right offer when it comes.

A $15 million offer isn’t better than a $12 million offer if you only need $10 million after taxes and the smaller deal has better structure.

Understanding Your Options

Strategic Buyers (Competitors, Suppliers, Industry Players):
Typically pay the highest multiples because they see synergies. Often require earnouts (portion of sale price contingent on future performance) or employment agreements to retain key talent.

Private Equity:
Strong buyers with capital, but often come with retained equity (you keep a minority stake for a “second bite” when they sell again). Expect to stay involved for 2-5 years post-sale.

Internal Succession (Family, Key Employees):
Preserves company culture but often requires creative financing. May involve installment sales, seller financing, or ESOP structures.

ESOPs (Employee Stock Ownership Plans):
Powerful for tax deferral. C-Corp owners can defer or eliminate capital gains through a 1042 exchange. S-Corp ESOPs can become fully tax-exempt. Complex to establish but valuable for legacy-minded owners.

The right buyer depends on your goals, financial needs, and how much control you’re willing to give up.

Keeping More of What You Sell For

QSBS (Qualified Small Business Stock):
If you’re a C-Corp, Section 1202 may allow up to $10 million (or more) of capital gains per owner to be excluded from federal tax, after a five-year holding period.

This is a strategy that must be designed years in advance, not months before a sale.

Squeeze and Freeze:
Discount your business value today using legitimate valuation methods, then freeze future growth outside your taxable estate through irrevocable trusts. When you sell 3 years later, that growth happens outside your estate. You pay zero estate taxes on the growth.

Cash Balance Plans:
If you’re in high-earning years leading up to a sale, we can set up cash balance plans to defer $100,000-$500,000 annually in taxable income. Reduces your tax burden before the exit.

Installment Sales:
Spread capital gains over multiple years rather than taking a massive tax hit in year one. Requires careful structuring with your CPA and attorney.

Charitable Strategies:
Donor-advised funds and charitable remainder trusts can significantly reduce capital gains on donated assets, while creating income streams and long-term charitable impact. For charitably inclined owners, it’s often more tax-efficient to donate highly appreciated stock rather than cash, and use cash to rebalance or reinvest, than to rely on “checkbook” giving.

Preparing the Business for Sale

Buyers pay more for businesses that can run without you.

What Increases Value:

• Documented processes and systems
• Strong second-tier leadership
• Clean books and contracts
• Diversified customer base (not dependent on one or two clients)
• Recurring revenue models

What Decreases Value:

• Owner-dependent operations
• Messy financials
• Customer concentration risk
• Outdated technology or equipment
• Legal or regulatory issues

We coordinate with M&A advisors, business coaches, and operations consultants to help you increase value before you go to market.