Exit Planning Tennessee: Preparing to Leave a Business
Selling or transferring a business is both a business decision and a personal financial event.
Exit planning Tennessee business owners undertake can help prepare for a sale, leadership transition, family succession, merger, or other ownership change.
The process often begins years before the expected transaction.
What Should Exit Planning Address?
Business Value
Understanding how a business may be valued can help owners identify areas that may require attention before a transaction.
Ownership and Succession
An exit may involve a third-party buyer, management team, family member, or another successor. Each structure can create different financial and tax considerations.
Tax Planning
The tax treatment of a transaction can materially affect the amount of wealth transferred to the owner. Tax planning should involve qualified tax professionals.
Personal Wealth
A business can represent a large percentage of an owner's net worth. After a sale, that concentration may shift into liquid investments and other assets.
Retirement Income
Business proceeds may become an important source of retirement assets. The owner may need to determine how those assets could support future spending.
Why Exit Planning Should Start Early
Last-minute planning can limit the available options. Starting early may give owners time to improve business operations, organize financial records, review ownership structures, evaluate estate plans, and consider tax strategies.
ProffittGoodson describes working with business owners around liquidity events, sales, leadership succession, investment planning, tax strategies, and estate considerations.
The Personal Side of an Exit
Owners sometimes focus almost entirely on the transaction itself. Personal planning deserves equal attention.
Questions can include:
How much will I need for retirement?
What will replace business income?
How should sale proceeds be invested?
What tax liabilities may arise?
How should assets be transferred to family?
What charitable goals should be considered?
Building an Advisory Team
Exit planning often involves several professionals. A business owner may work with an attorney, CPA, valuation professional, investment advisor, and other specialists.
The important issue is coordination. Each professional may address a different part of the transaction.
A wealth planning firm such as ProffittGoodson illustrates this coordinated model by connecting business succession with investment, tax, estate, and personal financial planning.
Conclusion
Exit planning Tennessee business owners begin early can address business value, succession, taxes, investments, retirement income, and estate considerations. Preparing the personal financial side of an exit can be just as important as preparing the business for a transaction.
FAQ
When should a business owner start exit planning?
There is no universal timeline, but beginning several years before a planned transition can provide more time to address financial and operational considerations.
What professionals are involved in exit planning?
Depending on the transaction, the team may include a CPA, attorney, valuation professional, financial advisor, and other specialists.
Does exit planning include retirement planning?
Yes. Business proceeds may become a significant source of retirement assets and income.
Can exit planning help with family succession?
Yes. Family transfers may require business, tax, legal, estate, and financial planning.
This material is for informational purposes only and does not constitute legal, tax, or investment advice. Please consult appropriate professionals before making decisions.
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