The Business Owner Exit–Succession Process
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By Scott Everly

It has taken years to get your business where it is today. Although it may seem premature to discuss an exit strategy, it is an equally important element of your business plan. The business owner’s exit plan can affect many decisions related to the business, since the exit plan could be one of many options, including initial public offerings (IPO), strategic acquisitions, or management buyouts (MBO). (1)

All business owners must one day transition the business, which means advanced planning is critical to achieving their goals—both for their business and family. Nearly 48% of business owners who want to sell their business someday have no formal exit plan. (2) What is the advantage of creating an exit strategy? For many business owners, it could put them in a tax-favored position once they are ready to make a move.

Let’s take a look at what Wealth Management Resources covers in our strategic exit-planning process. 

Stage 1: Initial Discovery Meeting

Defining exit objectives and goals:

  • What is your desired departure date?
  • What are your income/financial security requirements?
  • What exit routes are open to you?

Stage 2: Information Gathering

Personal financial analysis: 

  • Review existing financial, estate, and business plans.
  • Determine gaps in each of these plans, if any.
  • Discuss your wants and needs. 

Stage 3: Determination of Business Value

Current valuation and the development of value drivers:

  • Analyze each exit route to determine how to protect and increase business value and understand the tax implications of ownership transfer through sale, gift, and estate. 
  • Obtain a formal valuation performed by an independent third party to set a fair price for company stock based on a consistent methodology for valuing the stock in the future. Include a reasonable discount for lack of marketability and minority interest, if applicable. This provides a benchmark for buy–sell agreements and executive compensation, equity-based plans, etc.

Stage 4: Choosing an Exit/Transition Route

  • Sell to an outside third party (financial or strategic buyer).
  • Sell to employees using an Employee Stock Ownership Plan (ESOP)*.
  • Sell the business to one or more key employees (management buyout).
  • Sell to remaining shareholders.
  • Transfer the company to a family member(s).
  • Retain ownership but become a passive owner.

Stage 5: Implementation of Chosen Business Exit Route and Post-Transaction Servicing

  • Engage shareholders and the company to execute the chosen business exit route (external or internal sale or transfer).
  • Develop a contingency plan for the business (outline key succession management and be able to answer who will run the business in the event of a death or disability of current operational shareholders).
  • Develop a contingency plan for the owner’s family (financial, estate, and charitable planning).
  • Develop an ongoing servicing plan for the business and family (ongoing review to ensure that planning is being followed and to advise in the event of life changes within the family or succession management).

We’re Here to Help

Understandably, the process of creating a proper succession plan can be difficult and overwhelming. Most business owners are much better at working in their business than succession planning. This is where professionals can greatly assist owners by illustrating and implementing a clear and concise process, from A to Z.

We have assisted many of our clients with these issues at Wealth Management Resources and stand ready to help you navigate these complicated decisions, the transition, and whatever the next chapter holds. To schedule an introductory appointment with Scott, connect with him at (401) 356-1400 ext. 114 or at

About Scott

Scott Everly is executive vice president at Wealth Management Resources, Inc., an independent, fiduciary financial planning and investment management firm providing simple-to-understand guidance and solutions that help their clients pursue their goals. Scott truly cares about his clients and strives to be someone his clients can lean on and trust when they have questions or concerns. He puts his clients first and prides himself on taking the time to understand the intricacies of their needs, goals, and life situation so that their plan can be tailored to them and help them pursue the best possible outcome. 

When he’s not working, Scott loves to spend time with his family, especially enjoying their pool together in the summer. He enjoys beautifying his yard, tending the over 100 plants and flowers that live in his backyard. To learn more about Scott, connect with him on LinkedIn.