Exit Planning for Private Businesses
Business exit planning by industry leaders leaves you with more.
You’ve worked hard to build a thriving business, but you might not want to run the business well into your golden years. Exit planning allows you to make strategic goals for your business and personal future and map the steps toward accomplishing them.
John Pullen, Ph.D.
CHAANGE, Inc.
I bought the business for 30% of the offering price--a 70% reduction in price. I was delighted with Mr. Abrams’ skills in valuation, education, and negotiation
What is a Business Exit Strategy?
An exit strategy outlines a plan to ensure and increase the value of the business before reducing or liquidating ownership in a business, ideally at a significant profit. Formulating an exit plan helps business owners clarify their personal, financial, and business goals and strategize how to achieve them best.
AVGI provides exit strategy support to help business owners sell or successfully transition privately owned businesses most profitably. With our deep understanding of market conditions and what creates and drives value, we can assist you in positioning your business for the most successful transition when applying your exit strategy.
Why is Making an Exit Strategy Important?
While you might be confident that you only want to retire at a certain age, a business owner cannot always predict when they will need to exit their business. Unforeseen circumstances, such as illness or injury, can arise suddenly, forcing an unprepared owner to make complex business decisions under extreme pressure.
H.A., Esq.
(name withheld per company policy)
“The team at Abrams Valuation Group worked long hours at a very fast pace to comply with our short deadlines, and their work saved our client $10 million.”
Timing Your Exit Well
Proper planning allows you to time your exit strategy just right, which can significantly impact the profitability of your exit and the continuity of your business. Before exiting your business, you’ll want to make sure that your business is financially healthy with rosy growth projections so it is in the strongest position to negotiate a favorable sell price with potential buyers or transition smoothly to new leadership. The best way to time your exit right is by creating an exit strategy well in advance. By defining your exit goals and keeping your finger on the pulse of your business, you will position your business for a successful exit.
It is best to make an exit strategy at least 3-7 years before your desired exit time so you already have an optimal plan. Putting the time and effort now towards proper planning for your business’s future will ensure a smoother transition when you are ready to apply your exit strategy.
During my tenure as IRS Estate Tax Attorney, I audited several large estates where Mr. Abrams…represented the taxpayer…His works were always professional and cutting edge…I actually learned from his vast knowledge and expertise…I have seen Mr. Abrams’ draft manuscript for his upcoming book on valuing S corporations…I have never seen such a level of mathematical sophistication in business appraisal…Mr. Abrams is…very well respected within the IRS’s circle. I recommend clients who have estate and business valuation issues to seek Mr. Abrams’ professional services.”
The valuation has helped tremendously already in our negotiations when VCs say ‘we think you’re worth this’, we say ‘Well, we’re going to have to find a happy medium, because, as we’ve been told, we’re nothing without the VCS money, but our idea is still actually really valuable."
Why Involve a Valuation Expert in Making Your Exit Plan?
Abrams Valuation Group, Inc. (AVGI) offers an expert, forward-looking approach to business exit planning. AVGI helps you craft an exit strategy that protects and promotes your business and financial priorities, taxation requirements, and personal considerations. We have assisted many business owners in drafting and executing successful exit strategies, resulting in high profits with minimal tax obligation.
With our deep understanding of what creates and drives value, AVGI is uniquely positioned to assist business owners like you in gaining a good understanding of the current value of your company, strategizing how to increase its value, crafting the ideal exit strategy, and advising you on the optimal timing to apply your exit plan. Tapping into AVGI’s wealth of valuation knowledge and expertise allows you to create an exit strategy to maximize your business’s value, revenue, and profits.
When it comes time to execute your exit strategy, AVGI’s experts can assist end-to-end with mergers and acquisitions or provide an expert opinion with our transactions advisory services.
Finally, when the exit plan transaction is complete, you’ll likely need a valuation to determine your tax liability on the profits gained from the deal. AVGI’s innovative and empirical approach to business valuation has helped hundreds of businesses steeply reduce their tax liabilities by applying various valuation discounts. AVGI’s valuation results are precise, airtight, and audit-resistant, with an audit success rate of over 99%.
Begin with the end in mind, and involve AVGI’s valuation experts in your exit and succession planning from the start to ensure the maximum possible profits and the lowest possible tax liability for your business.
01
Understand, Maintain & Create Value
02
Maximize Profits & Minimize Liabilities
03
Exit Strategy Execution Support
04
Post-exit Valuation Services
“I’ve worked with a lot of appraisers. Jay Abrams is next level! He has an unparalleled passion for the subject and an amazing ability to communicate it.”
-Kevin F. Gillespie
Law Office of Kevin F. Gillespie
When it comes time to execute your exit strategy, AVGI’s experts can assist end-to-end with mergers and acquisitions or provide an expert opinion with our transactions advisory services.
Finally, when the exit plan transaction is complete, you’ll likely need a valuation to determine your tax liability on the profits gained from the deal. AVGI’s innovative and empirical approach to business valuation has helped hundreds of businesses steeply reduce their tax liabilities by applying various valuation discounts. AVGI’s valuation results are precise, airtight, and audit-resistant, with an audit success rate of over 99%.
Begin with the end in mind, and involve AVGI’s valuation experts in your exit and succession planning from the start to ensure the maximum possible profits and the lowest possible tax liability for your business.
01
Merger and acquisition
02
Selling your stake to a partner or investor
03
Initial Public Offering (IPO)
04
Management and employee buyouts
05
Family Succession Succession Planning Legacy Exit
06
Aquihire- Aquisition to acquire employees’ skills and talent.
07
Liquidation
08
Bankruptcy
The Business Exit Planning Process with AVGI
AVGI’s exit planning process is straightforward. We can help with end-to-end exit planning or come in on a consultative basis at any stage when you need extra support.
AVGI will perform a preliminary valuation of the business to
- assess the current approximate value
- identify critical strengths and weaknesses in the business
- Identify growth opportunities to increase the maximum value of your business
- Project the future tax obligations of potential exit strategies
During the Goal setting stage, our business valuation experts will help you identify your medium- and long-term business goals. Our valuation experts will ask questions like these to help you clarify your goals:
- Do you have a desired exit time?
- Do you know your exit options?
- What do you want to do after you exit your business? How can we align your personal goals with your exit strategy?
- Is your business ready to exit in its current state?
- Is the identity of the person who owns or manages your business after you leave important to you?
The answers to these questions will help guide the exit strategy that will work best for your business. For example, suppose you strongly desire to keep your business in the family. In that case, the AVGI team will help you focus on growth-oriented succession planning rather than readying your business for an eventual sale.
Next, we’ll make a roadmap to address the weaknesses we identified in our initial assessment, as well as crucial business growth opportunities that will increase the value of your business as you prepare to exit. We’ll address:
- What actions can you take to increase the value of your business significantly?
- If succession planning, what can you do now to help your business thrive under the next generation of family ownership?
We perform a valuation for exit planning close to the time of the exit plan execution. For example, if the owner opts to sell their business in an M&A deal, we perform the valuation to determine the business’s fair market value for the M&A deal. If the owner opts for a legacy exit, the valuation will establish the most accurate tax obligation for gift and estate tax in transitioning the business and valuable assets to relatives.
AVGI assists with executing your exit plan when you decide your business is ready. With our expert transactions advisory services and M&A advisory services, we can help find the right buyer, set a fair market price for the sale of the business, facilitate negotiations, perform due diligence, and offer specialized support throughout the transition process.
Abrams Valuation Group, Inc. (AVGI) offers an expert, forward-looking approach to business exit planning. With a deep understanding of what drives business value, AVGI can help craft an exit strategy that protects and promotes your business and financial priorities, taxation requirements, and personal considerations.
AVGI founder and president Jay B. Abrams is a published author on Quantitative Business Valuation, an essential skill for business exit planning. Our team applies his expert and systematic approach to every exit plan we create. We draw on our vast experience in valuation to deliver business exit strategy consulting and help our clients construct the most profitable and robust exit strategies possible.
Jay B. Abrams and his team have worked with businesses of all sizes and across many industries. Mr. Abrams works closely with hand-picked business analysts and valuation experts. Our outstanding national reputation in business valuation and building business exit strategies is built upon our many successful engagements with customers as we provide expert and secure exit strategies for businesses. Let us help you craft a strong exit strategy for your business.
We’ve compiled a list of the most common questions our customers ask. If you can’t find the answer you’re looking for here, please don’t hesitate to contact our customer support team, and we’ll be happy to assist you.
An exit strategy focuses on selling or transferring the business at the highest possible cash selling price or value, with the lowest possible risk level and tax losses. By hiring experienced, leading valuation experts, such as AVGI, to appraise your privately owned business, you will have a team of supportive professional individuals behind you until the signing to help you transfer or sell your business successfully. The substantial profit you stand to make is a motivation to create an organized, safe, and tax-efficient exit planning strategy around 3 to 7 years before you plan to transition the business.
When planning your business exit strategy, use a professional exit planning advisor to help you navigate the different exit strategies. Common exit strategies are: (1) Transferring business ownership to family member/s. (2) Sell to existing employers. (3) Initiate an employee stock ownership plan (ESOP). (4) Market the business to an interested third party, an individual, or a chosen company. (5) Perform a merger with a competitor or an investment group. (6) Liquidate your business and assets (7) Bankruptcy,
the least profitable exit option.
Business owners use exit planning programs to identify and plan for their personal, business, and wealth goals. Business, financial, and individual causes are powerful drivers for making a business exit plan. Some reasons that prompt business owner to make exit plans for their businesses are disability, death, or divorce; wanting to retire, wanting to divert assets to power up a new venture in a different field. Occasionally, loneliness and burnout affect privately owned business owners. Exit planning often enables a business owner to leave the business with all their assets intact and often with a profit.
Depending on the remaining time before executing the exit plan, we suggest performing an initial business assessment as part of the exit planning process and then a comprehensive valuation to execute the exit strategy.
Exit planning and estate planning should optimize your tax obligations as much as possible. A robust exit plan should address future tax considerations, including gift and estate tax on transferring a business or valuable assets to relatives. If you plan on succession planning, then you should optimize your gift and estate tax strategy as part of your exit plan.