Exit Planning for Business Owners: Protecting Wealth During the Transition

Start Planning—Earlier Than You Think

If you’re thinking exit planning is something you do six months before selling, think again. Ideally, you should start 3–5 years in advance. That might sound excessive, but exit planning isn’t just about selling the business. It’s about getting your financial house in order before, during, and after the transition.



This window gives you time to:

• Maximize your business valuation
• Organize financials and tax records
• Train successors or key employees
• Optimize legal structures for the sale
• Prepare personally for the shift in identity and income

We’ve seen owners get an extra 20–30% in sale value simply because they gave themselves time to plan well.

Know What Your Business Is Worth (Really)

A lot of owners think they know what their business is worth—but assumptions and reality rarely match. Getting a formal business valuation gives you a clear, unbiased view of your company’s worth, and it’s the foundation for any financial strategy.



That valuation also:

• Helps you set realistic expectations
• Identifies value drivers and risks
• Gives you leverage in negotiations

It’s not unusual for a business owner to discover that a few operational tweaks or updated financials could significantly boost value.

Choose the Right Exit Path

Not all exits look the same. Some owners pass the torch to family. Others sell to employees or third-party buyers. Each path has different implications—financial, emotional, and tax-related.

Let’s break down the big ones:

1. Selling to a Third Party

Clean break. Often the highest sale price, but also the most complex. You’ll want legal and financial advisors at the table.

2. Succession to Family

This can feel meaningful but may involve gifting shares, trusts, or below-market sale prices—raising tax and fairness questions among family members.

3. Management Buyout (MBO)

Key employees purchase the company, often over time. Keeps the culture intact but may take longer to complete.

Each route requires different planning—and different strategies to protect wealth.

Minimize Capital Gains and Other Taxes

Taxes can quietly erode a huge chunk of your sale proceeds if you’re not careful. Fortunately, there are ways to minimize the bite.

Some of the strategies include:

• Installment Sales: Spreads income over several years, potentially lowering your annual tax rate
• Qualified Small Business Stock (QSBS): If eligible, this could exempt up to $10 million in gains
• Charitable Remainder Trusts (CRTs): Allows you to donate stock, avoid immediate capital gains, and receive a lifetime income stream
• Opportunity Zones: Reinvesting proceeds into these zones can defer or reduce capital gains taxes



Your tax strategy should be built well before the sale agreement is signed. We worked with one owner who, by shifting to an installment sale and using a CRT, saved over $700,000 in taxes.

Align the Exit with Your Personal Financial Goals

Selling a business isn’t just a liquidity event—it’s a lifestyle change. The income stream you’ve relied on will likely disappear, so it’s crucial to map out what comes next.



Ask yourself:

• How much do I need annually to maintain my lifestyle?
• What are my new income sources (investments, rental properties, consulting)?
• How does this impact my retirement timeline?
• Do I want to start a new venture or slow down?

Work with your advisor to build a post-exit plan that integrates:

• Wealth preservation
• Diversification
• Tax-efficient withdrawal strategies
• Estate planning
  

Don’t Neglect Estate Planning

For many business owners, the sale of their company dramatically increases their estate value. That’s great news—but it can also trigger estate tax issues if you don’t plan accordingly.

Consider these tools:

• Grantor Retained Annuity Trusts (GRATs): Great for transferring appreciating assets with minimal gift tax
• Family Limited Partnerships (FLPs): Helps transfer business interests to heirs while retaining control
• Irrevocable Life Insurance Trusts (ILITs): Helps cover estate taxes without burdening your heirs



Updating your estate plan post-sale ensures your wealth stays protected—and lands where you want it to.

Prepare Emotionally for What Comes Next

It’s easy to get caught up in the numbers. But selling a business can be an emotional rollercoaster. You’re not just walking away from income. You’re stepping out of an identity you’ve lived for years.



Many owners struggle with the “what now?” after the deal closes. That’s why we encourage clients to explore what they want life after the business to look like early in the process.

One of our clients, after a successful exit, chose to become a mentor to startups. Another turned to philanthropy. Others just wanted more time with grandkids and less time on conference calls.

Whatever your version of “next” looks like—plan for it with intention.

Final Thoughts

The business you’ve built is valuable—financially and emotionally. Exiting it deserves more than a handshake and a wire transfer. It deserves a plan.

A good exit strategy isn’t just about the deal. It’s about protecting your wealth, minimizing taxes, supporting your loved ones, and preparing for what comes next.



Aligned Wealth Advisors helps business owners navigate every step of this journey. Whether you’re a few years out or already considering offers, we can help you build a path that turns your life’s work into lifelong wealth.

Andrea Ward, CPA

Andrea has worked in the finance industry for nearly all of her professional life. Taking over the family business she continues to combine her tax and investment knowledge to leverage the investment power of money while reducing gains taxes paid to the IRS. She lives in the Fort Worth, Texas area, (although is happy to work with virtual clients all over the United States!) Andrea loves to travel and dabble in home decorating.

Matt Ward

Matt began helping clients in the insurance industry. However, he struggled with big business’s emphasis on selling rather than helping, so he came to work with the family business focusing on investment advisory. In his free time, he shreds the gnar on his snowboard and jams on drums and guitar (but not at the same time).