What Does
Exit Planning Mean?
Exit planning is the complete strategy for exiting a privately held company. It involves analyzing the financial, legal and tax options and repercussions for leaving an organization. Exit planning is done to hopefully ensure that business value is maximized at time of exit, the personal and business goals of the exiting party are met, and that tax burdens are minimized.
Divestopedia Explains Exit Planning
When leaving a company, exit planning allows for peace of mind that everything is already taken care of. Poor exit planning can affect the success of the firm and the individual, both during and post-exit.
If an exit plan is well thought out and implemented, then it will enable the exiting party to:
- Reduce or delay the total taxes payable;
- Maximize the valuation and cash proceeds received at closing;
- Allow for smooth operational and management transitions; and
- Control the timing and terms of their exit.
Poor exit planning is often cited as a major contributing cause to failed business divestitures.