10 Key Steps to Successfully Create a Business Exit Strategy

Most business owners wait to plan their exit until they must. But with nearly 73% of privately held businesses in the U.S. planning to transition ownership within the next decade, the need to prepare has never been more urgent.

An exit strategy guides you through a smooth transition of ownership or leadership. Whether you plan to step back in years or have just started thinking about life after business, a clear exit strategy does more than prepare you for the future; it also strengthens your business today.

This guide shows you 10 direct steps to structure a flexible exit plan so you can move forward with clarity and confidence, no matter your timeline.

What Is a Business Exit Strategy?

A business exit strategy is a defined plan for how you, as the owner, will depart your business on your preferred terms. It specifies who will take control, how the transition will be managed, and what you aim to obtain, whether that’s financial stability, an ongoing legacy, or a complete separation.

The main purpose of exit planning is to preserve the value you’ve built. It is not exclusive to large corporations or owners nearing retirement. It is equally essential for:

• Small business owners preparing for the next chapter
• Entrepreneurs hoping to sell or scale
• Startup founders looking for investor-backed exits or acquisitions.

Regardless of whether you own a small business, lead a startup, or run a large company, an exit strategy gives you greater control over your business’s future and positions you to maximize opportunities and value.

How to Write a Business Exit Strategy

Writing a business exit strategy means putting together a clear, actionable plan for how you’ll step away from your business. It’s not just a document you create when you’re ready to leave. It’s a strategic part of running a business with a long-term vision.

A strong exit strategy answers three key questions:

1. When do you want to exit?
2. Who will take over or buy the business?
3. How will you transfer ownership and extract value?

Start by identifying your personal and financial goals. Do you want to retire completely, stay involved in a smaller role, pass the business to family, or sell to a partner or outside buyer? Your answers shape the rest.

Next, assess your business’s readiness. Review your financials, operations, leadership, and legal structure. Identify what must improve to attract a future buyer or successor.

From there, you’ll define your exit path: sale, succession, merger, or other options, and build a timeline that includes key milestones. Most well-prepared owners begin this process 2 to 5 years before they plan to exit, giving them time to strengthen value and avoid rushing critical decisions.

If you’re not sure where to begin or how to structure your plan, business exit consulting can help you navigate the process.

You don’t need all the answers right now. Start documenting what you know and take concrete steps to prepare today; these actions will make a major difference when the time comes.

Step-by-Step Guide to Building Your Exit Plan

Think exit strategy as building a roadmap: each step gives you more direction, clarity, and control over how your business journey ends (or grows).

Whether you plan to exit in two years or ten, these ten steps will help you prepare with intention.

Step 1: Define Your Personal and Business Objectives

Before you decide how to exit your business, you need to get clear on why you're exiting and what you want to get out of it.

Start by asking yourself a few straightforward but important questions:

• Do I want to retire fully or stay involved in some capacity?
• Am I looking for the highest financial return, or is preserving my legacy more important?
• Do I want to pass the business to someone I know or sell to someone I don’t?

Identify your personal goals, then set business actions that align with them. For example, if you plan to retire in five years with a set income, define specific growth steps now and target future buyers who fit those objectives.

Define what a “successful exit” means for your business by identifying concrete outcomes such as keeping your team employed, maintaining the company’s reputation, or ensuring your business continues to serve the community. Write down your vision so you have a clear plan to follow.

Step 2: Understand the Types of Business Exit Strategy Options

Once you know your exit goals, choose the best way to achieve them. There are six common exit strategies, each with pros and cons.

Sale to a Third Party

Selling your business to an outside buyer, such as a competitor, investor, or strategic partner, is a common way to exit.

• Best for: Owners ready to step away and cash out.
• Consider: Prepare for due diligence, negotiation, and post-sale changes.

Family Succession

Giving your business to a child or another family member is a popular choice for owners who want to keep the company in the family.

• Best for: Owners with a trusted, capable successor in the family.
• Consider: Be honest about their readiness and your willingness to step back.

Management Buyout (MBO)

A management buyout is the sale of a business to its current leadership team. Since they already know the operations, customers, and company culture, the transition can be smoother.

• Best for: Owners who want continuity and trust their internal team
• Consider: MBOs may require financing or staged payments to make the deal possible

Merger or Acquisition

A merger or acquisition (M&A) combines firms to gain market share or achieve growth. These deals can be lucrative but complex.

• Best for: Businesses with strategic value to competitors or complementary firms
• Consider: M&As require alignment in goals, leadership, and often, integration plans

IPO (for Scalable Startups)

An IPO is a major exit for fast-growing startups. It brings capital and visibility, but requires resources and regulation.

• Best for: High-growth businesses with strong revenue and demand.
• Consider: IPOs are rare for small firms and need prep.

Liquidation (as a Last Resort)

Liquidation closes the business and sells assets. It typically yields less than other exits but may be necessary if there are no buyers.

• Best for: Businesses with limited market demand or unsustainable operations
• Consider: It’s often a fallback, but can still be executed thoughtfully

Step 3: Assess the Value of Your Business

Before you exit, get a formal business valuation, not just an estimate in your head that reflects true market value.

Start by looking at key drivers of value:

• Revenue and profit trends
• Customer contracts or recurring income
• Tangible and intangible assets (like brand, IP, or tech)
• Industry outlook and competition
• Your role in the business (the less the business depends on you, the better)

Getting a professional business valuation, whether from a certified appraiser or a business broker, gives you a clear, well-supported understanding of your company’s worth. It also helps you identify areas to improve before a sale, such as tightening margins or diversifying your customer base.

Even if you’re not selling soon, this step sets realistic expectations, justifies your asking price, and helps position your business for growth.

Pro tip: Don’t wait until you’re ready to sell. Getting your business valued every few years keeps you prepared and empowers you to seize growth opportunities when they arise.

Step 4: Get Your Financials in Order

Whoever you sell or transition to: family, employees, or outside buyers, will closely examine your financial records. Clean, organized financials make your business more attractive, understandable, and easier to finance.

Here’s what to focus on:

• Ensure your P&L statements, balance sheets, and cash flow reports are accurate and up to date.
• If you've mixed personal and business expenses, separate them clearly.
• Identify outstanding debts, contracts, or liabilities, then contact relevant parties to resolve them promptly.
• Scrutinize tax records for any inconsistencies or gaps right away.
• Prepare a forward-looking financial forecast by projecting revenue and expenses based on historical trends.

If buyers lose faith in your numbers, the deal stalls or collapses. Sloppy records instantly slow the sale and set off due diligence alarms.

Work with your CPA or financial advisor to address any issues before they escalate. Your books don’t need to be perfect, but you must provide transparency and structure.

Step 5: Build a Strong Management Team

A business that runs smoothly without your direct involvement is far more valuable. Buyers and successors want a leadership team that can keep things moving even when you’re gone.

Identify key team members and assign greater responsibility. Train them, document your systems, and grant them decision-making authority. 

If you plan to exit by management buyout or internal succession, prioritize this step. Do not just hand over the keys; equip your team to lead.

Tip: Use this step to formalize roles and set up incentives for top performers. Build a leadership pipeline. Boost your business value and make your exit more attractive to buyers.

Step 6: Evaluate Tax Implications and Legal Considerations

Exiting your business will have tax and legal consequences, whether you sell, transfer, or shut down. Understanding those implications early can help you avoid surprises and keep more of what you’ve earned.

Start by meeting a tax advisor who understands business exits. We can help you choose the most tax-efficient deal structure, whether that's an asset, stock, or installment sale.

Also, evaluate your legal structure. Ensure your business entity (LLC, S-corp, C-corp) aligns with your exit objectives. Review and update essential documents such as:

• Buy-sell agreements
• Operating agreements
• Partnership contracts
• Employment or non-compete agreements

Clean legal documentation earns buyers’ trust and streamlines due diligence. 

Tip: Don’t wait until you have a buyer to involve professionals. The earlier your tax and legal advisors step in, the better they can help you plan and save.

Step 7: Plan for Succession (If Applicable)

If you plan to pass your business to family or internal stakeholders, you need a clear succession plan.

Start by identifying your successor. That might be a family member, a business partner, or a key employee. Once you’ve chosen that person (or group), talk openly about your expectations and timeline.

A strong succession plan does more than name a successor. It prepares them to lead by:

• Transferring knowledge and responsibilities gradually
• Giving them visibility with clients, vendors, and employees
• Clearly outlining their future role

If legacy matters, make this step as vital as finances. An unprepared successor risks confusion and lost value.

Pro tip: Formalize your plan in writing, and revisit it annually as roles and circumstances change. 

Step 8: Identify and Prepare Potential Buyers

Identifying the right type of buyer early can help you shape a better exit and increase your value.

Begin by describing your ideal buyer. Would you prefer to sell to:

• A larger company seeking fast growth?
• A private investor focused on strong returns?
• An employee or partner committed to legacy?

Each buyer sees value differently. For example, a strategic buyer may prioritize your customer base, while a financial buyer focuses on cash flow and ROI. The sooner you know your target, the better you can prepare your business for them.

Take these steps to get your business ready:

• Organize all financial statements and key contracts.
• Document processes, systems, and team structures
• Strengthen customer relationships and take measures to manage owner dependence.
• Preserve intellectual property and promptly resolve any pending legal issues.

Engage a business broker or M&A advisor. Instruct them to identify potential buyers, conduct a market assessment, and help position your company for sale.

Step 9: Create a Timeline and Communication Plan

Define your exit with conviction. Establish a clear timeline and communication strategy. Avoid rushing, and use a well-planned approach to assure your team, partners, and buyers of your leadership.

Set a realistic timeframe. Exit preparation usually takes 1 to 3 years. Break this down into key phases:

• Prepping your business (cleaning up financials, reducing risk)
• Identifying buyers or successors
• Negotiating and closing the deal
• Transitioning leadership and operations

Create your communication plan alongside your timeline. Identify who must know, what to tell them, and when to tell them. Start with core advisors. Gradually inform key staff, customers, and partners. Communicate well to preserve morale, keep key employees, and reduce rumors or disruption.

Tip: Keep your message simple, consistent, and focused on continuity. Reassure everyone about what will and won’t change.

Step 10: Assemble Your Exit Team

You don't have to do this alone. Assemble a small, trusted team of professionals who know the process and preserve your interests.

Here are the key professionals you’ll likely need:

• CPA or financial advisor – assess value, forecast outcomes, plan for taxes
• Business attorney – draft contracts, structure deals, and manage legal risks.
• Business broker or M&A advisor – find buyers, guide negotiations.
• Wealth advisor – plan your personal next steps (retirement, reinvestment, etc.).
• Internal team members – include your COO and key managers to ensure operational continuity.

Start building this team early. Meet with each member individually first, then bring them together as your plan takes shape. Encourage open communication and schedule meetings when needed so your CPA, attorney, and broker can regularly coordinate and align with you.

Common Mistakes to Avoid in Exit Planning

Even experienced business owners can misstep while planning their exit. Often, they wait too long, make assumptions, or underestimate the complexity. Here are some of the most common pitfalls:

1. Waiting too long to start planning

The most common mistake is also the most costly. Many owners delay exit planning until they’re tired, burned out, or forced to sell quickly. That limits your options and usually lowers your business’s value.

2. Relying too heavily on your role in the business

If the business can’t run without you, it’s hard to sell or pass on. Owners who stay too involved in daily operations make it harder for successors or buyers to see long-term stability.

3. Assuming family members will take over

Planning to hand the business to your kids or a relative? Make sure they’re willing, prepared, and aligned with your vision. Too many exits fail because of unspoken expectations or unqualified successors.

4. Not understanding tax and legal implications

Exiting your business affects your finances long after the deal closes. Some owners miss out on significant value or face large tax bills simply because they didn’t properly structure their exit.

5. Failing to define success

Not every exit is about maximizing price. For some owners, it’s about legacy, team continuity, or long-term brand reputation. If you don’t define what a successful exit looks like to you, it’s easy to chase the wrong outcome.

Conclusion: Leave on Your Own Terms

Exiting your business marks the end of one chapter and the beginning of another. And like any important decision, it’s always better to approach it with a plan than to react under pressure.

Whether you plan to retire, pursue a new venture, or simply step back from daily operations, a thoughtful exit strategy gives you control over the process. 

You don’t need to have everything figured out today. But taking that first step can set the stage for a smooth, successful exit down the line.

Frequently Asked Questions About Business Exit Strategy

1. What are the three main exit strategies?

The three most common exit strategies for business owners are:

1. Selling to a third party – This could be a competitor, investor, or strategic buyer.
2. Passing the business to a family member preserves family legacy, while passing it to an internal (non-family) successor ensures experienced business stewardship and continuity.
3. Closing or liquidating the business – Chosen when alternatives aren’t feasible or the owner seeks a straightforward exit.

Each strategy has distinct effects on timing, taxes, and business continuity, so selecting the optimal approach depends on your objectives.

2. What are the four basic exit strategy possibilities?

1. Third-party sale – Sell the business to an outside buyer.
2. Internal transfer involves passing the business to family members, partners, or employees.
3. Merger or acquisition – Combine your business with another company.
4. Liquidation – Close the business and sell assets.

These strategies can be customized based on your situation, timeline, and priorities.

3. What is a 5-year strategy plan?

A 5-year strategy plan outlines your business objectives and how you'll achieve them over the next five years, including your exit. It often includes targets for revenue, staffing, operations, and succession planning.

If you're planning to exit within 5 years, this plan serves as your roadmap for increasing value, reducing risk, and preparing for a successful transition.

4. What is an acceptable exit strategy?

An acceptable exit strategy aligns with your personal goals, preserves your business’s value, and enables a smooth transition, whether that means selling, transferring, or closing the business.

The best strategy depends on your timeline, your business's health, and who you want to take over (if anyone). What's “acceptable” is what works best for you, your team, and your long-term plan.

Let’s Talk About Your Next Chapter

You’ve built something worth preserving. Now it’s time to plan what comes next with the same care and clarity that got you here.

Whether you’re exploring options or ready to start mapping your exit, we’re here to help you think through the big picture and make confident decisions along the way.

Contact Boyce & Associates Wealth Consulting



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