How to Plan for a Business Sale
Selling a business is often the largest financial event of an owner’s life. Yet many people approach it as a transaction first and a life decision second. The sale itself may happen over a few months, but the impact of the decisions surrounding it can last for decades.
A good exit plan isn’t just about maximizing price. It’s about converting years of work into clarity, flexibility and long-term security.
Start With What’s Next
One of the most common mistakes business owners make is focusing almost entirely on valuation and deal intricacies without first defining what life looks like afterward. Are you planning to retire fully, take any time off or start something new? Will you need income from your assets, or is growth the primary goal? These questions should be at least thought about prior to the sale.
Understand What You’re Really Selling
A business sale is rarely as simple as cash hitting your account on closing day. Proceeds often come in different forms, such as cash at close, earnouts or seller notes. Each component carries its own risk, liquidity profile and planning implications. For example, cash at close is guaranteed but proceeds from earnouts can be variable if based on future revenue or growth targets, which directly impacts what’s appropriate for you from a planning perspective.
Taxes, Taxes, Taxes
Taxes are often the largest single reduction to net proceeds, yet they’re frequently addressed too late in the process due to the “close by any means” mindset. The structure of the sale, holding period and entity setup can materially affect the outcome.
While not every variable can be controlled planning ahead creates options. It’s important to coordinate early on with your CPA and advisor to help avoid surprises and reduce the pressure of making irreversible decisions late in the process.
Your Balance Sheet Changes Overnight
Before a sale, most owners have a large portion of their net worth tied up in one illiquid asset: the business. After the sale, that concentration typically shifts into cash and marketable investments. This is a major change in risk exposure.
The goal often shifts from aggressive growth to diversification, income planning and capital preservation. A portfolio that made sense while building a successful business may no longer appropriate once the sale is complete.
The Emotional Side Matters Too
Even successful exits can leave you disoriented. Many owners underestimate how closely their identity is tied to the business they built and only realize it after they’ve sold it. Without structure, the period after a sale can feel surprisingly uncertain, both financially and personally. Having a plan helps create continuity and a smooth transition into your next endeavors.
Exit Planning Isn’t a Single Decision
A strong exit plan evolves over time. It adjusts as deal terms take shape, markets change and personal goals become clearer. The earlier planning begins, the more flexibility you retain and the less weight any single decision carries.
Final Thought
Selling a business isn’t just a transaction - it’s a transition. The most successful exits are the ones where financial planning, tax considerations and personal goals are addressed together, not in isolation.
If selling your business is something you’re considering, even a few years out, stepping back to think through the broader picture with an advisor by your side can make a meaningful difference.
This article is for general informational purposes and may not apply to every individual situation. If this is a question you’re actively considering, a personalized conversation can often bring clarity.
