Business owners often get caught up in the logistics of preparing for exit. After all, the business itself typically constitutes about 80% of the owner’s net worth and is usually the most significant asset in their financial portfolio.

However, transitioning your business is much more than a financial transaction. It’s a major life change that can bring up a range of emotions, from excitement and joy to anxiety and even grief.

While reducing risk and enhancing the value of the business are critical components of transition planning, strategic and effective exits start with two personal questions:

How to Prepare Yourself for Exit

Selling your business is a significant milestone that opens the door to a new and exciting stage of life. With 73% of privately held companies in the U.S. planning to transition within the next ten years, the potential for a successful exit has never been greater.

By taking the time to prepare, you not only secure your future but also contribute positively to your community and the economy.

Embracing the process with the right mindset and preparation can turn challenges into growth opportunities and help you confidently navigate what’s next.

Identify Your Purpose Outside of the Business

A study published in the Journal of Business Venturing found that entrepreneurs are attached to their businesses similarly to how parents are attached to their children. As one client approaching their exit explained, “It’s like selling an entire being.”

Your identity and sense of purpose may be closely tied to the business, so it's essential to take a step back and think about what will bring you joy and fulfillment after your exit.

Here are some ideas for post-transition life:

• Explore New Hobbies and Interests: Whether gardening, painting, traveling, or learning a new language, discovering new hobbies can enrich your life and offer a fresh perspective.
• Volunteer and Give Back: From mentoring young entrepreneurs to serving on the board of a nonprofit organization, giving back can help you stay connected and contribute to causes you care about.
• Start New Ventures: Selling your business doesn't necessarily mean the end of your entrepreneurial journey. Whether it's a new startup, a consultancy, or investments in other companies, starting something new can provide a sense of purpose.
• Reconnect with Family and Friends: The demands of running a business can often strain personal relationships. Emotional support from loved ones can be invaluable as you navigate this new stage of life.
• Plan Your Legacy: This could involve focusing on wealth and estate planning to set your next generation up for success, creating a scholarship fund, or establishing a charitable foundation. Planning your legacy can provide a sense of accomplishment and ensure that your impact continues long after you’ve sold your business.

By identifying your purpose outside of the business and planning for a fulfilling post-transition life, you can ensure a smoother and more satisfying transition from business ownership to your next chapter.

Seek Professional Help from Trusted Advisors

You can’t do this alone — and you don’t have to. Seeking professional help can provide valuable insight and expertise to guide you through the complex process of selling a business. From working to maximize the value of your business before heading to market to identifying potential buyers and negotiating favorable deal terms, advisors play a pivotal role in alleviating stress and securing a successful outcome.

Transition planning also often includes other family members — which can sometimes lead to tension or disagreements. Advisors can mediate discussions and help manage family dynamics to promote harmonious and constructive decision-making.

Educate Yourself on What to Expect Before, During, and After the Sale

In a report from the Exit Planning Institute, 90% of surveyed business owners shared that the emotional impact of stepping away from their business was above average. The best way to prepare is to learn from first-hand experiences and professionals specializing in this field.

An educated business owner is a more empowered and strategic business owner.

Questions to explore include:

• What should I do now to increase business value?
• What will be examined during due diligence?
• Who could I pass my business to?
• How will my finances change after the sale?
• How can I prepare for the sale process?

Hear from Jeremy Smith as he shares his firsthand experience working with Eide Bailly during the transition of his business.

The client testimonial provided for Eide Bailly Advisors, LLC., is an individual experience and may not be indicative of the results, recommendations, strategies, or services that every client will receive. Each client's financial situation, goals, and risk tolerance are unique, and the services we provide are tailored to individual needs. Past performance is not necessarily indicative of future results. Before making any investment decisions, it is important to consult with us to develop a personalized strategy that aligns with your specific financial objectives. This client was not provided compensation for this testimonial nor was there a conflict of interest in sharing their experience with us.

Feel Confident in What Comes Next

Taking a holistic approach to transition planning and putting yourself at the forefront of your succession strategy will ultimately lead to a smoother, more fulfilling exit. As important as it is to focus on the future of your business, keep in mind that this is a major life decision for you as an individual.

Eide Bailly’s Transaction Advisory Services team has helped numerous business owners navigate the emotional and logistical components of exit planning. No matter where you are in your transition journey, we can help.