The guide
The short answer
Exit planning means deciding when you want to leave your business, who will take it over and what you need from the deal, then getting the business ready for that day. Succession planning is the "who takes over" part. Brokers report that most sellers did less than a year of exit planning; our rule of thumb is to start three years or more before you want to be out.
What is exit planning, and how is it different from succession planning?
Exit planning is the work of getting from owning a business to not owning it, on your terms. It covers when you go, who gets the business, what you need to take out of it, and what the business must look like for that to happen.
This guide is for an owner who expects to sell or pass on the business, most often to an outside buyer.
Three terms get used for overlapping things:
| Term | What it means | Example |
|---|---|---|
| Exit plan | The whole path out: timing, the money you need, the route, the preparation | "Out in four years, sell to an outside buyer, get the records buyer-ready first" |
| Succession plan | Who takes over ownership or running the business | "My operations manager buys the company over five years" |
| Exit strategy | The route you choose: usually a sale, a transfer or closing | "Sell the business" |
If you plan to sell to a stranger, you still need an exit plan. The successor is simply the buyer.
How early do most sellers start exit planning?
The IBBA (International Business Brokers Association) and M&A Source run a quarterly survey of brokers. Their Market Pulse for the second quarter of 2026 was completed by 255 brokers and M&A (mergers and acquisitions) advisors, who reported on 181 transactions. Two findings matter here:
- Retirement was the leading reason owners went to market in every deal-size band. It accounted for nearly two-thirds or more of reported sales from $500,000 to $50 million, peaking at 72% for $1 million to $2 million. Below $500,000 it was 45%.
- Most sellers had done little exit planning before they sold. Across the five deal-size bands, between 60% and 90% of sellers had done less than a year of exit planning, or none at all.
What are your options for leaving a business?
The US Small Business Administration (SBA) names three ways to transfer a business: an outright sale, a gradual sale (paid for over time) and a lease. The table shows the main routes to weigh; a sale to a partner or employee can be a gradual sale.
| Route | Suits you if | What it takes |
|---|---|---|
| Sell to an outside buyer | You want a clean break | Recast earnings (explained below), documents in order, a business that runs without you. A broker usually runs the process, and it takes months: see how long a sale takes |
| Sell to a partner or key employee | Someone already knows your customers and staff | A buyer who can raise the money. Part of the price may be paid over time, and their financing sets the terms (see the SBA note below) |
| Sell or hand to family | A relative wants the business and can run it | A willing, able successor, a price you can defend, a plan for relatives outside the business. Tax and estate questions are a job for your lawyer and CPA |
| Sell to a competitor or a larger group | Your profit and market position would add to a bigger company, including one owned by a private-equity firm (an investment firm that buys companies) | Clean numbers, a clear fit, usually a broker's introduction. Ask your broker which buyers actually buy at your size |
| Wind down | There is no buyer, or the business is mostly you | A closing plan: the SBA lists six steps. You collect what the assets bring after debts, not a price for the business |
Size changes who has the stronger hand. In the same IBBA report, sellers had the edge when the business was worth $2 million to $50 million, while the smallest Main Street deals favored buyers (Main Street is the survey's name for businesses under $2 million).
An ESOP (employee stock ownership plan) is a formal, regulated way to sell to employees through a trust. Ask an advisor whether it fits.
If your buyer uses an SBA 7(a) loan (the SBA's primary business loan program), the SBA's rulebook for lenders, SOP 50 10 8.1, effective October 1, 2026, shapes the deal. In an ordinary sale to a new owner, the seller generally can't stay on as an officer, director, stockholder or employee. The business may keep you as a consultant for up to 24 months in total. A sale to an employee who has worked in your business for at least 24 months falls under a different SBA category, an owner buyout, with its own rules, so a key employee's time with you matters. Selling to a buyer with an SBA loan covers what changes for you.
When should you start exit planning?
Earlier than feels necessary, because some fixes, such as making the business run without you, take months. These timings are our rule of thumb, not survey data:
| Time before you want to be out | What to work on |
|---|---|
| 3 years or more | Pick a preferred route. Start moving daily decisions and key relationships off you. Ask your financial planner what you need from the sale |
| 2 to 3 years | Start the recast: three years of financials, each adjustment documented |
| 1 to 2 years | Check customer concentration (how much revenue rests on a few customers) and contracts. Choose your advisors |
| Under 12 months | Finish the records, decide whether to use a broker, and plan for the sale to take time |
| Sooner than planned (illness, a partner dispute, burnout) | Get recast earnings and documents in order first, since buyers and lenders ask for those up front |
What will a buyer look at first?
Most buyers and their lenders will want proof of the same things. Start with the numbers. Small-business accounts are prepared for tax reporting, not to show a buyer the cash flow available to an owner. Recasting presents the same records in the way buyers and lenders assess them.
- Three years of recast earnings, each adjustment documented (SBA lenders ask for the seller's last three complete fiscal years of statements)
- Add-backs (personal and one-off costs) with paper behind each one
- A business that doesn't need you for daily decisions
- No single customer large enough to worry a buyer
- Leases, licenses and contracts that can be transferred
- A price based on recast earnings and on what similar businesses sold for
Our checklist for preparing a business for sale takes each item in turn. Making your business run without you covers one of the slowest to fix.
Who helps with an exit plan?
| Advisor | What they do for your exit |
|---|---|
| Business broker | Markets the business, finds and screens buyers, runs the sale. See selling by owner or with a broker |
| CPA | Tax on the sale, how the sale is structured, the state of your books |
| Lawyer | Contracts, leases and ownership documents, family and employee transfers, what happens to ownership if you can't work |
| Financial planner | What you need from the sale to fund life afterward |
| Exit planning advisor | Coordinates the pieces. Some hold the Certified Exit Planning Advisor (CEPA) designation, awarded by the Exit Planning Institute after training and an exam. Their day-to-day work varies with their main profession |
| Certified appraiser | An independent opinion of what the business is worth |
For your own value, tax or legal position, these are the people to ask. Three questions to put to any of them: How often do you work with businesses my size? How are you paid? What won't you do?
Your one-page exit plan
- The date I'd like to be out, and the latest date I could accept
- My first-choice route from the table, and a second choice
- Who might take the business over, by name if I can
- What I need from the sale after tax and debts (from my financial planner and CPA, not a guess)
- What I will do afterward
- My team: CPA, lawyer, financial planner, and a broker if I use one
- The three things to fix first, from the buyer checklist above
Where to start this week
Block an hour and fill in the page. Then pull your last three years of tax returns and profit-and-loss statements, because most routes start there. The full process is laid out in how to sell a small business.
Take the page to your CPA and your financial planner and ask one question: what would I need to net from a sale, and by when?
See where your business stands
Our free readiness score takes about ten minutes. Fourteen questions, scored the way a buyer would weigh them, with the three gaps most worth fixing. Nothing you enter is shared with anyone.
Keep reading
- How to sell a small business: the steps, in order
- Checklist for selling a business: how to prepare it for sale
- How to make your business run without you
This guide is general information, not tax, legal or valuation advice. Every business is different: talk to your accountant, lawyer and broker about yours.