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What to Consider When Planning Your Business Exit Strategy, Part II

In the first post of this series, I talked about the financial preparation required to maximize your outcome when you exit your business.  Of course, that assumes you will sell or value the company at exit.

There are certainly scenarios where that may not be part of the exit at all.  For example, if you are passing it on to kids or employees, the valuation may not really be a significant consideration.  There are many different ways owners exit their businesses.  My last post addressed one of those scenarios: preparing your company financially for sale.

But this next area of consideration will happen no matter what your exit strategy turns out to be.  Whether selling or planning for the succession of your company to family or trusted employees, every owner will experience many emotions upon exit.

After all, you’ve poured your life and energy into the business for years if not decades.  It’s like your baby, and you’ve probably spent more time with it than any children you may have been blessed with.  So you have to prepare emotionally for the transition.  If you don’t several issues could arise.


The first thing I suggest is to do all you can to take the emotion out of the process.  This means thinking ahead and writing down some key guidelines.  I call these the “non-negotiables” of the exit.  What are the things that have to occur for you to be satisfied with an exit?

It may be a number of things, and I highly recommend you make a list.  If an item on your list of non-negotiables is not met in an offer you are considering, pass and move on.  This takes a lot out of the emotion surrounding your exit away from the decision making process.

Let the list of requirements drive the discussion and analysis.  If emotion is part of every decision regarding your exit, you’ll be a stressed out, overwhelmed, and are likely to feel like an emotional wreck. 

The list of non-negotiables is about stepping back to consider your exit and what you hope the future of your company will be after you are gone and then taking steps to help prepare for that desired state.  Everyone’s list of non-negotiables will be different because our companies, desires, and convictions are radically different.


The following are some questions you might want to consider when creating your list:

  • What is a financial number you will not go below?
  • What are the terms of the deal you are willing to consider (cash, earnout, seller note)?
  • How important is it to you that there is alignment with your current mission, vision, values, and culture?
  • What considerations matter to you around the markets to be served?
  • How do you want your employees to be considered in the offer?
  • What will the fate of your leadership team be?
  • What is important to you in terms of employee benefits and care of team?
  • What is important to you in terms of care of clients?
  • What products and services do you currently sell and how do you see that being impacted by your exit?
  • What are the Non-compete/Non-solicitation requirements by which you are willing to be bound?  For what period of time?
  • What mindset do you want the company to have?
  • What requirements do you have for the due diligence process if you are selling?
  • What is your desired timeline for closing a deal or transitioning out?


I suggest you create this list even if you aren’t considering any current exit.  In fact, it may be easier to create the list now, long before exiting the company is a priority because you will be able to be more objective.  Remember that this list isn’t written in stone.  They are guidelines.  You can come back to it and review it regularly.  Your feelings and priorities may change.  However, when you are prepared to begin the exit process, I encourage you to get the list in “final” form and then truly use it as a tool and filter to help guide your exit by keeping the main things front and center.

You can even use your non-negotiable list as a screening tool.  If you get calls from potential buyers interested in your business, you can ask if you can send over your list, and if they are willing to comply and meet all those things, you can tell them you would be glad to have further discussion.


Once you go through the exercise of determining your list of non-negotiables and define those things that are the fences to any potential exit, it can be much less stressful and helps take the emotion out of the exit decision.  There will still be a lot of emotion in various aspects of your exit; that is inevitable.

As entrepreneurial owners, any type of exit no matter how successful will be emotional in some way as we let go of something we built and loved for a period of time.  However, hopefully creating a list and using it as a tool to filter possible deals or succession plans like I recommend will help you to be clear-minded as you make decisions throughout the exit process.

Many bad exits happen because people act out of emotion, not logic and fact.  The more you do to prepare and make sure you don’t get into a situation where you are making a decision without guidelines and fences in place, the more likely you are to get the outcome you truly desire.

Planning goes a long way to help set you up to make a successful exit.  Take the time to create your list even if you aren’t seriously thinking about it today.  That day will come.  You can always adjust and modify the list later, but start today and begin to identify what has to occur for you to exit.

Posted on Monday, January 23rd 2017

Tags business planning RLO Training selling your business