An Overview of Exit Planning

If you’ve just started your own business, your first thought is probably not to plan for how to close it down. Not planning for how to end your business can be a bad idea for many reasons, so it’s important that you have a solid exit plan set in place just in case something happens where you need or choose to shut down.

Starting a business is a risky move that can have a handsome payoff and it’s important to remember that having an exit strategy doesn’t mean that you’re planning to fail. On the contrary, an exit plan is just another part of planning your business for the long term. If you haven’t thought about it yet, don’t worry! We’re here to provide the overview of exit planning that you didn’t know you needed.

What’s an exit plan?

An exit plan is a business strategy put in place that details how to get out of ownership of your business. There are several options for what you can do. Your exit plan can detail different routes to take if something does or doesn’t happen. For instance, something might change in your personal life and you want to get out of owning and running the business for those reasons and not because it’s doing poorly. In these instances, you will want to have a plan in place for how you can sell it off or pass it down to someone else. Or, something might happen where it’s time to close down your business altogether. In these cases, your exit strategy will discuss the proper way to liquidate all of its assets and officially close its doors.

What is detailed in your exit plan will also depend on the type of plan you’ve chosen because selling off shares to one person is a lot different than selling them off to thousands. There are many state and federal laws that you have to comply with in either situation, so it’s important to keep that in mind when you’re selecting which plan to use. Some of the most common plans involving merging your business with another, holding an initial public offering (IPO), selling to a single buyer, or liquidating your assets and closing up shop. Every business has its own unique needs and so it’s important that you work with your attorney to research every option and figure out which one is best for you.

What should you look out for?

As with anything involving business, there are lots of rules and regulations that must always be abided by if you ever choose to execute your exit strategy. That’s why it not only is so important to actually have a plan in place, but also to take everything into account when drafting it in the first place. It’s also important to remember that your plan will need to be revisited and revised regularly as your business grows. Not only might new laws require some things to be changed, but your business itself might change so much that your original exit plan is no longer the best course of action.

Work with an experienced California business attorney.

It goes without saying that working with an experienced business law attorney to help you develop and implement your exit plans is essential to making it run as smoothly as possible. At Integrated General Counsel we regularly work with business owners like you at every step, from the business’s inception to its end. If you are starting your company, or already have a business and need an exit strategy, please contact IGC today!

Integrated General Counsel