The idea of transitioning away from your business can leave you feeling immense emotions. You may be inclined to push off preparing your transition plan, but the fact that it has crossed your mind says otherwise. Being ready for your exit doesn’t have to look like completely retiring, but putting off preparation could look like never selling. 

Why You Should Consider Exiting Sooner

Crafting a transition plan is integral to ensuring your exit is as smooth and profitable as you want it to be. There are many factors to consider, and having time to reflect and adjust is important. For example, if your business is a C-Corp, you risk double taxation during a sale. If your business is an S-Corporation, this could be avoided, but you are required to have five years of S-Corp status by the IRS to take full advantage of the available tax strategies. 

Additionally, the mergers and acquisitions process takes longer than people often expect. The average M&A transaction can be closed within three years of a business owner deciding to sell their business. Getting started before you’re ready to sell allows you to save your future self time when you do decide to sell. The preparation process itself may even help you feel ready to sell. 

Even if you aren’t ready to retire completely, you may be readier than you think! Business owners are often misled to believe that retirement is the only option, but not every transition plan looks the same. If you are a business owner who wants to stay involved post-sale, you could simply take a step back and become a key board member for the business. Smaller businesses may consider selling stock to family members to have a foot in the door. Larger businesses may consider an employee stock ownership plan to keep their legacy going.

Your transition plan and retirement shouldn’t be taken lightly, so don’t hesitate to start preparing. Contact Stony Hill Advisors to start planning with an experienced M&A advisor. Let’s work together.