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    Business exit planning

    Most owners plan the transaction thoroughly and the consequences of the transaction barely at all. The two are not the same project.

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    Earlier is materially better than later on this one.

    The problem

    For most owners, the business is the largest asset they will ever hold and the sale is the largest taxable event they will ever trigger. The transaction receives extensive professional attention. The owner's position after the transaction often receives very little until it is too late to change.

    Timing is the constraint that surprises people. Many planning approaches require structure to be in place before a binding commitment to sell exists. Once a letter of intent is signed, or once a sale is treated as effectively arranged, options that were available a few months earlier may no longer be.

    The other common problem is identity. An owner whose income, schedule and sense of purpose all came from the company has to replace all three at once. Plans that address only the money tend to be judged harshly a year later.

    The approach

    1. 01

      Clarify the objective

      Sale to a third party, transfer to family, sale to management or employees, and gradual withdrawal are different plans with different timelines.

    2. 02

      Establish the personal number

      What the owner needs the proceeds to produce, after tax, for the rest of their life. This frequently changes the transaction target.

    3. 03

      Understand the tax exposure early

      Deal structure, entity type, basis and allocation all drive the outcome. This work belongs with the CPA and transaction attorney, engaged early.

    4. 04

      Evaluate structural options while they remain open

      Installment approaches, trust structures, charitable strategies and staged transfers generally require pre commitment planning.

    5. 05

      Prepare the business

      Reducing owner dependence, cleaning up financials and documenting processes affect both value and buyer confidence.

    6. 06

      Plan the life after

      Income structure, protection, legacy objectives and what the owner will actually do with their time.

    Who belongs in the room

    • A transaction attorney for deal structure and documents.
    • A CPA for tax modeling of alternative structures.
    • A business broker or M&A advisor for market process and valuation context.
    • A valuation professional where an independent number is required.
    • A wealth strategist to keep the owner's post sale objective visible throughout.

    Questions to ask before signing a letter of intent

    • What is my estimated after tax proceed under this structure, and under the alternatives
    • Which planning options close once this document is signed
    • How is the purchase price allocated, and what does that do to my tax result
    • What portion of the price is contingent on future performance
    • What income will the proceeds realistically produce, and is that enough
    • Has anyone modeled the year of sale against my other income

    Key takeaways

    • The planning window is widest well before a sale is arranged and narrows sharply at the letter of intent.
    • After tax proceeds, not headline price, is the number that matters.
    • Exit planning and personal income planning are one project, not two.
    • Tax structure decisions belong to your CPA and attorney, engaged early enough to be useful.

    Important disclosure

    This page is general education, not legal, tax or investment advice, and not a recommendation of any specific product. Suitability depends on individual facts, product terms, issuing company strength and current law. Guarantees, where mentioned, are backed solely by the claims paying ability of the issuing insurance company. Consult your own licensed legal and tax professionals before acting.

    Last reviewed 2026-08-09 by Tim Parnell.

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