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Exit Planning

Our Mission

We help closely held businesses plan for and execute successful exits: achieving financial freedom, creating a sustainable legacy, and exiting on their own terms.

What is the Best Exit Strategy for Me?

During your lifetime or at death, your business will be given away, sold, or liquidated. These three outcomes are not exit strategies but they are certain. The word “strategy” implies a planned, desirable result. Death is not a strategy! There are, in fact, only four possible exit strategies. Identifying your strategy as early as possible creates a clear path to achieve a successful exit.

The four possible exit strategies are:

  1. Pass to Family
  2. Sell to Outside Third Parties
  3. Sell to Inside Key Employees
  4. Planned Liquidation

Selling your business to an outside buyer and selling it to one or more key employees are different strategies. Conventional wisdom often lumps these two options together as simply “selling the business.” An outside party sale is usually a completely different process from selling it to one or more employees. To successfully implement these four strategies may require four totally different sets of tactics.

Get a sense of how well you are prepared for a successful exit. Review the Seven End Zone Questions Worksheet: What Every Business Owner Must Answer in the Inevitable Exit.


Will I Achieve Financial Freedom?

Achieving financial freedom after you exit your business does not happen without a solid plan. That’s why NAVIX developed the Exit Magic Number™ calculation. It determines the value you need from the business between now and your target exit date to achieve financial freedom. Note that the Exit Magic Number focuses on how much you need from the business, not what your business is worth. This is a different approach from most conventional approaches, which emphasize getting “maximum value” for the business. Getting maximum value is good and desirable but may not be the most important issue.

What if you succeed in getting “maximum value” but find you are unable to afford financial freedom? Is this a successful exit?

There are two reasons why the Exit Magic Number calculation is arguably the most important number in exit planning for closely held business owners. One reason is “defensive” and the other is “offensive”.

On the defensive side, the issue is simple but critical—if the owner exits for a net amount short of his or her Exit Magic Number, he or she will fail to achieve personal financial freedom in the manner he or she aspires. The owner who falls short must either reduce his or her post-exit lifestyle, take on higher post-exit investment risks than he or she is comfortable with, go back to work, or some combination of the three. Few owners would happily choose this outcome.

Knowing one’s Exit Magic Number allows the owner to take control of the process by making decisions today and at exit that defend against coming up short. For example, identifying the number well before exit helps the owner forecast how big the business must grow to in order to not come up short, and make strategic decisions that drive the business toward the owner’s exit success. In another example, an owner seeking to sell the business can use his or her Exit Magic Number calculation to negotiate the deal terms with an eye towards receiving sufficient cash at closing to reach personal financial freedom. The selling owner who walks away from the closing table with net cash sufficient to achieve personal financial freedom is assured that any additional dollars in the transaction not received at closing and therefore at risk, such as deferred payments, earn outs, seller financing etc., will not compromise his or her financial security.

Playing “offense,” owners who know their Exit Magic Number calculation can take advantage of tactics at business sale that defer and reduce income taxes, estate and gift taxes. Having an accurate estimate of the Exit Magic Number allows owners to consider estate tax sheltering strategies without undermining their future financial freedom.

Contact us for a no-cost 45 minute consultation that will give you a solid sense of how prepared you and your company are for a successful, fulfilling exit.