Is Your Business Prepared for Sale?

Serious potential consequences await owners who neglect to prepare their business, and themselves, for a future sale or transfer. Here are ten exit planning mistakes to avoid:
  1. The business experiences a sudden, catastrophic loss and all of the owner’s financial eggs are in the business.
  2. A perfect buyer suddenly appears and makes a fantastic offer, but the owner cannot consummate the sale due to prohibitive (and avoidable, with planning) tax cost and a lack of sufficient independent retirement income.
  3. An agreement to sell is made with a qualified buyer, but the buyer reduces the offer after finding aged accounts receivable and owner loans on the books.  In short, the company’s books were not in order.
  4. An unanticipated catastrophe hits the business and because the owner failed to have a contingency plan in place, or existing support from legal/financial advisers, the business cannot survive.
  5. The sole owner dies or becomes permanently disabled, without sufficient (or no) life or disability insurance, no business succession plan, and no estate plan.
  6. One of the partners dies or the partners have an irreconcilable falling out and there is no clear buy-sell agreement – either of these situations commonly result in expensive litigation, and value erosion.
  7. The business is struck by a huge, legitimate legal claim with insufficient liability insurance in place thereby irrecoverably impacting the enterprise value and marketability.
  8. One of the company’s key employees quits, taking the best customers and other employees with him because the company has no non-compete agreement or retention plan to prevent this from happening.
  9. The owner wishes to retire and sell the business to a family member but there is insufficient time to make the transfer and pay minimal taxes.
  10. The owner has selected a capable non-family heir apparent, but has no written succession plan in place and the heir apparent cannot realistically fund the transfer.
All of these mistakes can be avoided with a well thought out exit plan developed in advance of a sale and updated frequently.
For more information about preparing to sell and exiting your California-based business successfully, please contact Jim Leonhard at 916-800-2716 or