Early Exit Planning for Your Business – Building Value
Nicole Kislingbury General Partner, 2 Liquid Assets
Are you planning to exit your business in the next 1-3 years? Per a Forbes February 2026 article, “Six million small and midsize American businesses are set to be involved in a "great ownership transfer" by 2035 as baby boomers retire.”
Early Exit Planning
There are a significant number of businesses out there that have been built over the last several decades: captained by entrepreneurs who had a good idea, worked hard, and grew their concept into an income generator that provided for their livelihood.
Often, however, these entrepreneurs were so busy working IN their business, they didn’t have time to work ON their business. They may be excited about what comes next, however unaware that they may not have set up their business to be attractive to a seller, have a proper succession plan, or understand how to wind things down.
No matter how close you are to retiring, it is never too late to start planning an exit strategy for your business. However, the sooner you start, the more time you have to thoughtfully impact the potential outcome.
Set Goals
The first step of any exit plan is understanding your personal goals. Do you want your business to continue after you leave? Do you want your family involved in the business? Are you looking to maximize the cash out of the business? Are you looking to save the maximum in taxes? Do you want to pass on generational wealth? Do you want to make a charitable donation? Is the exit your sole source of income? Will you maintain some involvement with the business?
These and hundreds of other questions may cross your mind. There are great advisors out there who may assist you with identifying and exploring the things that are most important, but often they may only have the knowledge to take you down the path of their specialty. Therefore, it is important for you as business owners to have a basic understanding of your vision and to screen advisors for those who are truly there for you and, where needed, will further refer you to other advisors who best align with your goals.
Prepare
After gaining an understanding of your goals, then you need to identify everything you will need to know and do to achieve it. Preparation for a business exit typically requires rigorous and comprehensive financial documentation. This may include valuations, an audit of financial statements, quality of earnings analyses or a requirement to demonstrate detailed accounting processes and control environment.
For many business owners, you may have foregone formalized accounting, finance, and control processes in order to focus more on your operations. Perhaps you were comfortable running your business in that way, however others looking to purchase your business or succeed you in your role may require assurances, confirmation, evidence, and other validations to be comfortable to take it on. If you have been able to deprioritize accounting to date, it may be time to take a look at it today! A good accounting system will help you understand what is important to your buyers...and potentially increase the value of your business!
Wait…accounting can increase the value of my business? How?
Increase Value
There are a number of benefits to formalizing your accounting and control processes. Here are just a few:
1) Creating and understanding detailed financial statements helps an owner to see where they might cut costs, how different product lines are performing, how to identify products with the best margins, or how an investment in capital expenditures might impact results.
2) Understanding various financial statement line items and financial statement ratios helps you to understand how someone else will value your business. You can then focus on improving the financial statement line items that would most impact a future valuation.
3) An audit will help you gain assurance that your financial statements are correct, provide similar assurance to a potential buyer, and help you to know what will be important to other users of your financial statements.
This isn’t just making the process easier, understanding your financial statements can actually assist in increasing the value of your business before your exit! Early exit planning is the key!
Solutions
If you’ve struggled with accounting and finance concepts or haven’t been through an audit before, we are here to help!
Transform your grasp of accounting concepts with an introduction to the COLOR ACCOUNTING LEARNING SYSTEM ™. Our Let’s Talk Finance courses include:
A Foundation of Accounting Language and Mechanics of How Financial Information is Put Together
Explaining Sources & Uses of Funds
Defining the Accounting Value Cycle
2 Liquid Assets provides business training, coaching and consulting services to a variety of industries. We specialize in making accounting easy to understand for:
Trend Analysis
Informed Decision Making
Value Creation
Process Improvement
Preparing for your First Audit
A dedicated effort to ensure that your accounting systems, records, and processes are ready for the scrutiny that comes with an exit event will ensure an easier transition and potentially increase the value you can receive for your business!
Whether you are looking for a “crash course” in accounting or someone to walk beside you as you navigate the financial information needs for your exit strategy, we have the knowledge and content to get you prepared for the transition.
Contact 2 Liquid Assets to learn how an upskill of your accounting and financial knowledge may improve your exit strategy.
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