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Business Succession and Exit Planning Checklist

A free checklist to help you prepare to leave your business and fund your retirement.

This free checklist will give you a realistic look at how well you’re prepared to leave your business and fund your retirement, including areas like: getting ready to leave, retirement strategy, tax planning, succession planning and transferring your business.

 

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Getting Ready

I have defined my personal goals and vision for the transfer of ownership and management

 

I have assembled a team of legal, accounting, business brokerage and financial planning experts to help me with developing and executing my exit plan

 

I have informed my customers and other key stakeholders about my exit plans

 

I have developed a clear vision for the future of the business

I have a buy-sell agreement in place

 

I have had a business valuation done by a certified professional

 

I have completed a financial analysis of my company and will have a financial performance improvement plan completed before the sale

 

I have completed an operational analysis of my company and will have an operational performance improvement completed before the sale


Retirement Strategy

I have prepared a retirement plan that includes:

A statement of my objectives

A method for structuring the succession including tax consequences

A schedule for transferring ownership

Defined management roles for family members (if applicable)

Defined transitional roles for family members (if applicable)

Defined transitional role for non-family members

Activities for communicating my plans to other stakeholders

Contingencies plans for unexpected events

I have determined my income needs for my retirement

I have calculated how and the degree to which the business will fund my retirement needs

I have a plan in place for supplementing my retirement income in the case that the business does not supply enough income

I have plans in place for diversifying my pool of retirement capital


Tax Planning

I have talked to my CPA to get an understanding of how various deal structures will impact after-tax sale proceeds

I have talked to my CPA to get an understanding of strategies I can employ to defer or eliminate the payment of taxes, including

Gifting

Trusts

Outright sale

Installment sale

Buy/sell agreement

Employee Stock Ownership Plan

Family partnership

I have talked to my CPA and have strategies in place to avoid double taxation issues upon the sale of the business, including:

The pros and cons of converting a C Corp to an S Corp before the sale

The pros and cons of converting an S Corp to a C Corp before the sale

 

I have talked to my CPA and other advisors about the issues and tax consequences of valuing my business and personal goodwill as part of selling the business

 


 

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Succession Planning

I have a written succession plan that includes milestone dates for actions

 

I have selected a successor and candidates for other key management positions

 

I have qualified my successor as having the necessary financial resources to buy and maintain the business

 

I have a training program in place for my successors and management candidates

I have a plan and I am currently helping my successors build their profile and credibility with customers, employees, business advisors and the business community

 

I have a contingency plan in place that outlines alternative courses of action if the intended succession does not occur

 

Have dates been established to review, evaluate and adjust the plan annually?


Transferring a Family Business

I have made a decision about keeping ownership of the business in the family

 

I have discussed my plan with my spouse and children

 

I have objectively assessed the capabilities of my children and other family members for continuing the business

 

I have developed a plan for dealing with family members who will not be involved in the business

 

I have a contingency plan in place for dealing with all aspects of transferring the business to my family in the case of my premature death:

Bequests related to the business
Tax consequences
Ownership allocations
Buy-sell agreements
Debt elimination
Capital injections
Key employee retention plan

 

I have a contingency plan in place for dealing with all aspects of transferring the business to my family in the case of my disability:

Retention vs liquidation
Degree to which business will provide ongoing income
Buy-sell agreements
Disability insurance
Debt elimination
Capital injections
Key employee retention plan

 

 

I have established family communication practices to integrate family members into the management and ownership succession process

 

I have a management succession plan that includes:

Communication to family, managers and employees
Criteria for employment of family members
Criteria for employment of spouses and in-laws
Compensation philosophy/approach for family members
Grooming/training management successors
Performance reviews for family members
Role of current owners during and after the management succession
Role of non-family employees in senior management
Conflict resolution process
 

I have an ownership succession plan that includes:

Timeline for the ownership succession
Communication to family, managers and employees
Identification of who can own shares and why
Identification of share acquisition method and funding
Pace of the ownership transfer
Role of current owners during and after the ownership succession
Compensation for the owners
Management of minority shareholders
Role of non-family employees in ownership
Terms and conditions of loans to family members
Identification of philanthropy and community activities
Guidelines for conflict of interest for family members
Shareholders agreement reflects/supports the succession objectives
Conflict resolution plans

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