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Leaving Your Business: An Exit Planning Guide

Every owner leaves their business someday: by selling it, handing it down, or something unplanned. Exit planning is how you make that day your choice, on your terms.

In one minute

  • A good exit needs three kinds of readiness: the business, your finances and you.
  • The main paths are a sale to an outside buyer, a transfer to family, a sale to managers or employees, or closing down.
  • Much of a company's value is "intangible": its people, customers, systems and relationships. These can be strengthened over time.
  • Planning three to five years ahead gives you the most options.
Part 1

Three kinds of readiness

Exit planners often describe a successful exit as a three-legged stool. If one leg is short, the whole thing wobbles.

Business readiness

Could the company run, and grow, without you? Buyers pay more for businesses with a strong team, documented systems, steady customers and clean financials.

Financial readiness

How much do you need from the business to fund the life you want after it? The gap between that number and what the business could sell for drives many decisions.

Personal readiness

What will you do next? Owners who haven't pictured life after the business are more likely to delay, or to regret the sale.

Score yourself on all three with the Business Readiness Snapshot.

Part 2

The main exit paths

Sale to an outside buyer

Helps withOften the highest price, especially from a strategic buyer or private equity.
Watch forDue diligence, earn-outs or seller notes that delay full payment, and less say in what happens to your people.

Transfer to family

Helps withKeeping a legacy in the family, with flexible terms and timing.
Watch forFairness among children who work in the business and those who don't, gift and estate tax, and whether the next generation truly wants it.

Sale to managers or employees

A management buyout, or an employee stock ownership plan (ESOP), which is a retirement plan that buys the owner's shares.2

Helps withRewarding the people who built it, and continuity for customers.
Watch forBuyers often lack cash, so the owner may finance part of the price. ESOPs have setup costs and ongoing rules.

Closing the business

Helps withSimplicity when the value is mostly the owner's own work.
Watch forUsually the lowest value, plus leases, employees and tax filings to wind down properly.1

Whichever path you choose, a current buy-sell agreement protects you if an owner dies or becomes disabled first. See The Buy-Sell Agreement Nobody Updated.

Part 3

What drives value

Two companies with the same profits can sell for very different prices. Much of the difference comes from four kinds of intangible value:

PeopleA capable team that doesn't depend on the owner
CustomersDiverse, loyal, under contract, not tied to the owner personally
SystemsDocumented processes, clean books, technology, intellectual property
RelationshipsCulture, reputation, vendor and community ties

Improving these takes time, which is the main reason to start early.

Part 4

A realistic timeline

  1. 3 to 5 years outSet goals, get a professional estimate of value, and identify the gaps in all three kinds of readiness.
  2. 2 to 3 years outBuild the team, reduce owner dependence, clean up financials and contracts, and review estate and tax plans.
  3. 1 to 2 years outChoose the path, line up advisors (attorney, CPA, investment banker or broker), and plan your next chapter.
  4. The transactionMarketing, offers, due diligence and closing often take 6 to 12 months.
  5. AfterTransition period, investing the proceeds, and updating your estate plan.

The U.S. Small Business Administration also has a plain-language overview of closing or selling a business.1

Thinking about your exit, even if it's years away?

Exit planning works best with time on your side. A conversation can map where you stand on business, personal and financial readiness, and who else belongs on your team.

Book a time with Kevin Educational only. Business sales, valuations and tax planning should involve your attorney, CPA and a qualified business appraiser.

Sources

  1. U.S. Small Business Administration, Close or sell your business. Accessed November 10, 2026.
  2. IRS, Employee Stock Ownership Plans (ESOPs). Accessed November 10, 2026.

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