Whether a business owner wants to retire to a tropical island or simply move on to the next venture, an exit plan is crucial to ensure a seamless sale. The business owner that plans wisely, in advance, can negotiate a transaction that benefits buyer and seller alike.
Barring unforeseen circumstances (injury, illness, family emergencies), it’s wise to plan for a sale at least one to three years in advance. Sellers should have at least three years of unblemished tax returns on hand, which will help an appraiser or broker accurately value the business and give the potential buyer a clear picture of a business’s cash flow. No one likes to pay taxes, but if you plan to sell a business, it’s best to think conservatively with deductions.