Selling a Business Checklist: 5 Essential Steps for a Successful Business Exit

March 13, 2024
Hancock Whitney Financial Planning
Hancock Whitney Financial Planning

For most owners, exiting their business is a monumental step. Whether the transition involves shifting control of the company to a key employee or a group of employees, gifting it to a family member, or stepping aside as it’s recapitalized by an outside entity, it’s a pivotal moment. Having an exit plan – allowing business owners to transition their business on their terms – is crucial to the success of the transition.




This process requires multiple steps, from planning through execution of your eventual business sale. If you're contemplating an exit from your business, our comprehensive “Selling a Business Checklist” is a concise, step-by-step guide to help ensure a successful business sale.


Download the Selling A Business Checklist


Step 1: Understand your goals and readiness to exit

Your personal goals for retirement should guide your budget, which will impact the funds you may need to net from your business. Your business exit goals matter. For instance, do you hope to transfer the business to a family member or key employee, or is your main objective to get the best price possible, regardless of buyer? Do you have an ideal timeline for exiting - as soon as possible, as long as it takes, or somewhere in between?

Review the financial resources you'll rely on for your retirement income - such as retirement accounts, investments, Social Security benefits, pensions and annuities. Compare that income to expected expenses based on your retirement goals. This can show you whether your non-business assets are likely to fully fund your desired retirement or whether you'll have a funding gap.

If you do have a funding or value gap between your expected retirement assets and expenses, there are many ways to fill it, including revamping your personal financial habits, maximizing and growing business value, or establishing a corporate management structure that, over time, will make the business less dependent on you as the owner. Our “Selling a Business Checklist” provides more information about this.

You’ll also want to think about what you'll do with your days after retirement to help you mentally prepare for this major transition to your routine.


Step 2: Educate yourself and determine your exit path

It's important to educate yourself so you understand all available exit options, and the pros and cons of each strategy. Your personal and business objectives should always be a major guiding factor when helping choose the exit option that is right for you.

As outlined in our “Selling a Business Checklist”, the financial resources needed can also dictate the exit option you ultimately choose to execute, depending on how reliant your retirement funding is on the proceeds of your business. Your business may not net the same proceeds regardless of how you exit.

For instance, if you gift your business to a family member or charity, its value will likely be based on fair market value as determined by a valuation specialist. A gifting strategy may net little to no liquidity, making this option more appropriate if you have adequate retirement assets to fund your retirement goals.

The highest sales prices are generally associated with third-party sales to a competitor or private equity group, making these good options if you need to maximize proceeds to support your retirement. With these options, the value of your business is essentially whatever the buyer or investor is willing to pay. However, netting the highest sales price may not always result in the highest net proceeds. You should work with a CPA and tax attorney to review your individual tax situation, and what the net proceeds may be for each exit option you are considering.


Download the Selling A Business Checklist


Step 3: Maximize and protect your business value

Understanding the current worth of your business is a crucial step that could involve obtaining a formal or informal valuation. This step, which is outlined in detail in our “Selling a Business Checklist”, is vital for setting a realistic and attractive purchase price. Consider consulting with investment bankers, business brokers, or valuation experts that are knowledgeable about your industry.

There are a variety of ways to maximize and grow business value. You may want to analyze cash flow or enhance capital efficiency, review inventory turnover or cash collection cycles, or create a business structure for a sustainable business without you. If you’re uncertain about how to ensure that your business is sustainable after your departure, read our Insights blog, How to Determine if Your Company Is Ready to Transfer to Sell.

Unexpected events can crop up in the life of every business. Protecting your business value will require you to create a business continuity plan which includes reviewing your various insurance policies. When unfortunate things happen, it's helpful to have a carefully designed and frequently updated buy-sell agreement in place that sets the value of your business and treats all parties fairly and impartially. To be certain you’re prepared, read another recent Insights blog, Does Your Company's Buy-Sell Agreement Cover Everything It Should?


Step 4: Assemble your team and execute your strategy

There are a number of important players on your team who will help you plan and execute your business sale. Without the right guidance, your business exit will not be successful. Your Wealth Advisor and Exit Planner will ensure all advisors remain focused on execution within a timely manner. Organizing and coordinating the team is an important part of the process. Advisors with specialized expertise will be required to collaborate on the execution of your strategy. This will require specialists in the areas of Planning, Legal, Tax, Insurance, Business Transactions, and Consulting.

Our “Selling a Business Checklist” will outline the full team you’ll need to enlist to execute your strategy. You can also learn more with guidance from the US Chamber of Commerce on Considerations When Selling a Business.

It is never too early to engage your advisor in exit planning. Seeking advice when growing your business can provide valuable insights into ways to grow, protect, and eventually transfer your business in a seamless way. The ideal timeline would be 3-5 years prior to a planned exit in order to achieve the desired results. However, we can provide valuable guidance throughout the transition of your business even if you are looking to exit your business today.


Step 5: Implement the sale of your business

After you’ve planned your sale, maximized your business value, determined how you want to proceed, and assembled your team, you’re ready to implement the sale itself. The steps here are numerous and absolutely critical to get right.

The extensive documentation you will be required to gather as part of pre-sale due diligence includes tax returns, company procedures manuals, profit and loss statements, and intellectual property rights, among others.

Creating a management transition plan that will address the need to establish a Board of Directors, a formal management structure, and selecting individuals within your company for key roles is vital for the success of your exit plan.

Marketing your business and negotiating with potential buyers means presenting a compelling case for the value and potential future growth of your business. Careful preparation and consulting with your team of advisors to engage in negotiations can lead to securing the best possible deal. Working with an experienced investment banker or business broker to leverage a network of potential buyers will help locate the right buyer and facilitate the sale. Once you’ve identified a buyer, you’ll need to structure the deal and negotiate the appropriate legal documentation, including confidentiality agreements, with support from your legal advisors. The structure of the transaction may include a stock sale, asset sale, earn out agreements and selling financing. All of this is outlined in our “Selling a Business Checklist”.


Selling A Business Checklist

Download the Selling A Business Checklist


What's your next step?

If you're an owner who is considering the sale of your business, begin by reviewing our “Selling a Business Checklist”. A Hancock Whitney banker can help you with the next steps in building your business exit plan, from reviewing your financial plan, to conducting an informal business valuation, identifying any funding gaps and helping you find solutions. We bring years of experience guiding business owners across diverse industries, a deep understanding of our clients’ goals, and a team of experts to help business owners through the exit planning process.

We’re ready to be your financial partner by providing access to our expertise and 5-Star service. Click the button below to have one of our bankers contact you and answer any questions you may have. We look forward to working with you.


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The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.

Hancock Whitney Bank offers investment products, which may include asset management accounts, as part of its Wealth Management Services. Hancock Whitney Bank is a wholly owned subsidiary of Hancock Whitney Corporation.

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