Is There a Difference Between Business Succession Planning and Exit Planning?

James Jones
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On Nov 14, 2019
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Is There a Difference Between Business Succession Planning and Exit Planning?

Are you planning on leaving a business you’ve owned for quite some time? It’s okay if you are, quite a few people undergo this process throughout their lifetime. Maybe you are ready to retire, maybe you’ve made enough profit with your business that you’re ready to leave it all and travel the world, or maybe you can’t run a company anymore due to health conditions. There are a million things that could possibly affect your ability to run a successful company. We are going to talk about what you should do in cases like these, and what the best process to part from your business is. 

There are two main options for business owners to choose from when transitioning away from your business in Miami; either you have a succession or an exit plan that will be executed by an attorney. First, it’s important to mention that exiting your business doesn’t have to mean disaster or failure, in fact, many business owners start their own business with the purpose of exiting after a certain amount of years. This doesn’t mean they are less committed entrepreneurs, it just means they have thought ahead and have a plan in place for the future.

Leaving your business at the right time can be one of the best decisions for your business in the long run. Sometimes a leader who has the time and effort to run the business is a much better fit than someone who is ready to be transitioned out of it. Just because you don’t want to own the business any more doesn’t mean you can be involved in it. We will touch on this more when we discuss exit planning with an estate attorney in Miami

Exit planning is a process where you get to choose exactly how you want to leave your business - this allows a larger variety of choices and options for the business owner. In simpler words, it is a collaborative effort between the owner and their advisors. Exit planning puts the owner directly in charge of deciding what method works best for them. A good advisor will develop great listening and questioning skills that will help the owner understand what works best for the business owner and the business during the exit. 

The best kind of exit strategy is often one that is planned well in advance. When you’re starting out as a business owner in Miami, it’s easy to think of your business’s future growth and success. However, it’s equally as important to be pragmatic from the very start. You see exit strategies are not about planning for the worst, they are about turning a good situation into a great one. You can do this by easing out of your business at an optimal time in your life. If you don’t think of your exit strategy ahead of time and wait until your business is in trouble, it’s difficult to position yourself for a soft landing.

There are several different routes you can take during a business exit strategy. Your attorney will let you know how you can opt to go the route of legacy, mergers & acquisitions, acqui-hire, management/employee buyout, initial public offering (IPO), liquidate, or as a last resort, bankruptcy. As you can see there are many different ways you can choose to exit your business, and the best way is going to differ from business to business. 

  • Legacy - Many entrepreneurs want to keep their business in the family long term which means making plans for transitioning the company to a child or other relatives at a certain point. Of course, this is an appealing option but make sure your family relationships can handle the volatility and stress of running a business.


  • Mergers & Acquisitions - This means your company is either purchased by or merges with a company similar to yours. Depending on who you merge or sell with, it could mean flexibility in terms of your involvement, or freedom to completely walk away. 


  • Acqui-hire - This is a special kind of business acquisition in which a company buys out a business simply for the sake of acquiring its skilled or talented employees. Of course, this won’t do much for your “legacy” however it will take care of your employees and give them a job.


  • Management & Employee Buyout - It’s possible that the people who already work for you know how to manage the business and possibly want to own it as well. This could result in a smoother transition and increase loyalty to your business’s legacy.


  • Initial Public Offering - You can also sell your business to the public - this is certainly not for every business owner. Business conditions need to be just right for this option to be possible. Even if your business is booming your industry might not appeal to the public in a way that gets stock buyers excited. However, if IPO is possible and the conditions are right, it can be very lucrative.


  • Liquidate - This is one of the most final options when discussing an exit strategy. When liquidating your company you will first close it, and then sell all your assets like estate, technology, etc. Just remember if you decide to liquidate your assets, you will need to use some of the cash to pay off any debts and payout. shareholders. 


  • Bankruptcy - No one wants to file for bankruptcy but it is a last resort option for many business owners. It’s not the end of the world, you may have assets and estate seized and troublesome credit but you will be relieved of the debt and burden or the business if things go really south.


There isn’t that much of a difference between a succession plan and an exit strategy. Succession planning focuses on preparing a business for an owner’s exit- specifically concerns the continuity within leadership and management following the owner’s exit. More or less succession planning is a specific cog within an exit plan. The main difference between the two is that succession planning focuses on the business rather than their client, the owner. Whereas an exit strategy attorney will largely focus on the owner itself.

Hopefully, I have shined some light on the best way to exit your business when the time comes. Whether it’s in Miami or New York, you should have enough information to start your journey. If you still have discrepancies don’t hesitate to reach out to experienced attornies that will give you the proper guidance you need.

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