Exit Planning

Why do Exit Planning?

Exiting, or transitioning out of your business is assured for every business owner. The important question
is not, “If you will exit,” but, “How will you exit?” Will you be like the great majority of business owners
who either fail to transition out of their business or profoundly regret selling? Or, will you be able to
monetize the business you’ve spent your life building? Will you leave a legacy that represents your great

According to recent surveys by PriceWaterHouseCoopers and others, 80% of businesses under $50 million
in value never sell. Of those that do sell, 75% regret the decision. These statistics don’t just apply to those
who sell to a third party. Succeeding the business to your children has an even greater failure rate with
70% failing in the second generation and only 12% surviving into the third generation. The statistics are

Why such a high failure rate? The evidence shows that a lack of planning or simply starting too late is the
primary reason for failure.

Business Owners are Not Prepared:

  • 75% don’t have any kind of exit plan
  • Only 25% have done any financial planning
  • Two-thirds do not know all their exit options
  • 78% have no transition team, 83% have no written transition plan, 49% have no plan at all.
  • 40% have no plan to cover the 5 D’s (Death, Disability, Distress, Divorce, Disagreement)
  • 86% have not completed a strategic review or a value growth project

Exit Planning addresses the systemic issues that every business owner must face when transitioning out of
a business and it mitigates for transfer failures by providing a framework for a successful exit.
Exit Planning is for every business transition, whether you are transferring the business to your children,
key managers, or selling the business to a third party.


What is an Exit Plan?

The Exit Plan begins with 3 key assessments, the value of the business, a personal readiness and business attractiveness score. With these assessments in hand, an analysis is made that confirms strengths and weaknesses across all intersecting segments.

An Exit Plan will:

  • Identify how to maximize the value of the business
  • Ensure the owner is personally and financially prepared
  • Ensure the owner has planned for life after business

As Certified Exit Plan Advisors (CEPA), Protelum Advisors follow a proven methodology developed by the Exit Planning Institute (EPI).

When to Start an Exit Plan?

It is wise advice to start planning for your exit the first day you start working in your business yet most  of us don’t start that early. We recommend starting five years before you plan to transfer out of your business. As the saying goes, “If you fail to plan, you plan to fail,” and this holds particularly true when it comes to transitioning from your business.

Where you get in trouble is when you do not do enough advance planning. As many of our attorney partners can testify, they are often handed an executed Letter of Intent by an owner begging the question, “How can I save taxes on the sale of my business?” The reality is, in many cases, if you’ve signed an LOI it’s too late for some of the best tax saving strategies, many of which take years to implement.

Some business owners are certain they have done the planning and are ready to take the steps to transition out of their business. While many want to learn more about the value drivers of their business and what essential components they need to consider before pulling the trigger. Whichever you are, Protelum Advisors can help; with over twenty years of experience in advising thousands of business owners, we are prepared to be your most trusted advisor.”

Questions every business owner needs to be able to answer

If you’re like the majority of business owners, your business represents the lion share of your net worth. In fact, surveys conducted estimate that business owners have on average 95% of their net worth tied up in their business!

With this much on the line can you answer these 10 questions?

  1. Besides your salary, what is the total amount of consideration you receive from your business?
  2. What value do you need to get from your business, after tax that would equal the consideration you are pulling from your business each year?
  3. How much money do you really need to maintain your life style?
  4. What is the real-life value of your business?
  5. Based on a successful sale of your business, at what age do you run out of money?
  6. What tax strategies have you created to limit the taxes on the transfer of your business?
  7. What tax strategies have you created to limit the amount of estate taxes when you die?
  8. Have you established a plan for what you will do after you retire?
  9. If transferring your business to your children, 70% of business successions fail, have you developed a plan to insure their success?
  10. Do you have a contingency plan should something happen to you before you are able to exit from the business?

If you do not have a satisfactory answer for any of these questions you need an Exit Plan.

Protelum Advisors first started with the Exit Planning Institute in 2008 and is a Certified Exit Planning Advisor (CEPA). The CEPA designation is the only exit planning designation recognized by the Financial Industry Regulatory Authority (FINRA) and is the most widely accepted and endorsed professional exit planning program in the world.

While other firms may tout exit planning, Protelum Advisors is a certified advisor by the nation’s leading authority on Exit Planning.

The Starting Point

The first step in creating an Exit Plan is to complete the Owner Readiness Assessment survey and the business operations assessment along with a real-life business valuation performed by a certified business appraiser.

What Exit Planning Accomplishes?

Establishes a Business Valuation Baseline Creates a Personal and Business Plan that:

  • Lowers Business Risk.
  • Avoids Asset Concentration.
  • Maximizes Value of Company for the purpose of an Exit.
  • Properly values your Company.
  • Helps Preserves Wealth for Later Generations.
  • Lowers or Eliminates Capital Gains Taxes.
  • Creates Peace of Mind.

Learn More About Protelum Advisors