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Wake-Up Call: If you think you'll figure out your exit strategy "when the time comes," you're setting yourself up for a costly disappointment. The data doesn't lie—and neither should you to yourself about where you stand.
The Numbers That Should Keep You Up at Night
Here's the straight truth about business owner readiness based on the latest Exit Planning Institute research:
50% of Baby Boomer business owners plan to exit within the next 5 years
But here's the kicker:
• Only 27% have a formal business valuation
• Just 9% have an estate plan in place
• A measly 5% have assembled an exit planning team
Let that sink in. More than half are planning to exit, but 95% don't even have the basic team assembled to execute that exit properly. That's not planning—that's hoping.
The Market Reality Check (Q3 2025)
If you think you can wing it based on the "good old days" of business sales, think again. Here's what's happening right now:
Deal Volume: Down 4% year-over-year in Q2 2025
Median Sale Prices: Dropped 6% to $352,000
Time on Market: Increased by 12 days due to new SBA policies and market uncertainty
Market Sentiment: More brokers now call this a "buyers' market"
Financing: Significantly tighter for businesses under $5M EBITDA
Translation: Strong, well-prepared companies still sell well, but it takes more preparation and flexibility to get to closing. The unprepared get picked apart.
The "5 Ds" That Force Unplanned Exits
Most business exits aren't planned—they're forced by what the Exit Planning Institute calls the "5 Ds":
The 5 Ds That Destroy Value:
Death – Sudden loss of the owner
Disability – Health issues preventing continued operation
Divorce – Marital dissolution forcing asset division
Disagreement – Partner or family disputes
Distress – Financial or market pressures
Any of these can happen tomorrow. Planning is the only antidote.
Essential Elements of a Real Business Transition Plan
1. Your "Why," Numbers, and Timing
Personal goals: Target exit date, post-exit lifestyle, ongoing role (if any)
Financial target: Net proceeds needed (post-tax) to fund your retirement/next chapter
Timing horizon: Plan on multi-year preparation—even "quick" deals take longer than expected
2. Value-Readiness and Risk Reduction
Clean, auditable financials with quality-of-earnings readiness
Recurring revenue and diversified customer base
Documented processes and systems that run without you
Strong management bench that can operate independently
3. Deal-Readiness Infrastructure
Diligence vault: 3 years of financials, contracts, leases, IP documentation, HR records
Transaction structure playbook: Asset vs. stock sale implications, seller financing tolerances
Issues list: Known problems with fix timelines already in motion
Tax Planning Opportunities You're Probably Missing
Recent Tax Law Changes Creating New Opportunities:
Section 1202 (QSBS) Just Got Better: The July 2025 OBBBA law expanded QSBS benefits for new stock acquired after July 4, 2025:
Tiered holding periods: 3/4/5 years for 50%/75%/100% exclusion
Issuer gross asset cap raised to $75M (indexed)
Per-issuer exclusion cap raised to $15M (indexed)
ESOP 1042 Rollovers: Selling C-corp shares to an ESOP (≥30% sold, 3-year holding) and reinvesting into Qualified Replacement Property can defer capital gains with potential estate step-up.
2025 Estate/Gift Thresholds: $13.99M basic exclusion per person, $19,000 annual gift exclusion—coordinate lifetime gifts and trusts with your exit proceeds.
Common Mistakes That Cost Owners Real Money
Costly Mistake | Why It Hurts | Fix It By... |
|---|---|---|
No valuation, no target number | Can't manage what you haven't quantified | Get professional valuation NOW |
Owner dependence | Business can't run without you = lower value | Build management systems and delegate |
Customer concentration | >20-30% with one customer = valuation discount | Diversify revenue streams aggressively |
Weak financial hygiene | Spooks buyers and lenders | Clean books, separate personal/business |
Ignoring tax structure until LOI | Last-minute planning = value leakage | Model tax scenarios early |
Your Exit Options: Know Before You Need
Third-Party Sale (Strategic or Financial Buyer)
Best for: Strong profits, growth runway, transferable operations
Key considerations: Asset vs. stock sale drives tax outcomes, working capital negotiations, customer concentration risk
Management Buyout (MBO)
Best for: Stable cash flows, strong team, limited external appetite
Key considerations: Financing is tighter for smaller EBITDA companies, often requires seller notes
Employee Stock Ownership Plan (ESOP)
Best for: Preserving legacy/jobs, phased liquidity, tax efficiency
Key considerations: Potential 1042 rollover tax benefits, complexity requires experienced team
Family Succession
Best for: Capable next generation with governance systems
Key considerations: Requires valuation, financing strategy, and gift/estate planning
What to Actually Do in the Next 90 Days
Your 90-Day Action Plan:
Week 1-2: Assessment Phase
Commission a sell-side valuation and readiness assessment
Calculate your post-tax "enough" number for retirement/next chapter
Identify the top 3 value killers in your business
Week 3-4: Team Assembly
Engage M&A advisor/broker with your industry experience
Secure M&A attorney familiar with tax-efficient structures
Connect with CPA specializing in transaction tax planning
Review wealth/estate planning with qualified advisor
Week 5-8: Foundation Building
Start building your diligence vault (financials, contracts, IP)
Document key processes and reduce owner dependence
Analyze customer concentration and diversification opportunities
Review and clean up corporate governance and compliance
Week 9-12: Strategic Positioning
Model tax outcomes for different sale structures
Evaluate QSBS opportunities under new 2025 rules
Align estate planning with expected liquidity event
Create preliminary exit timeline with key milestones
The Bottom Line
Your business is likely your largest asset. The difference between a well-planned exit and an emergency fire sale can be measured in millions of dollars and decades of retirement security.
Reality Check: In today's market, with deal volume down, pricing pressure increasing, and financing tighter, preparation isn't optional—it's the difference between achieving your goals and accepting what's left on the table.
The owners who start planning now, while they have time and options, will command premium valuations and favorable terms. Those who wait will take what the market gives them.
Which group will you be in?
Ready to Take Control of Your Exit Strategy?
Don't leave the biggest financial transaction of your life to chance. Let's discuss your specific situation and create a transition plan that protects your wealth and achieves your goals.
Schedule a confidential consultation today.
Brett Vogeler, Strategic Business Advisor Licensed Business Broker
This newsletter is for informational purposes only and does not constitute tax, legal, or investment advice. Consult with qualified professionals regarding your specific situation.
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