Editing Succession planning (section)

==Business Exit Planning==
With the global proliferation of SMEs, issues of business succession and continuity have become increasingly common. When the owner of a business becomes incapacitated or passes away, it is often necessary to shut down an otherwise healthy business.  Or in many instances, successors inherit a healthy business, which is forced into bankruptcy because of lack of available liquidity to pay inheritance taxes and other taxes.  Proper planning helps avoid many of the problems associated with succession and transfer of ownership.

Business Exit Planning is a body of knowledge which began developing in the United States towards the end of the 20th century{{Citation needed|date=December 2013}}, and is now spreading globally.  A Business Exit Planning exercise begins with the shareholder(s) of a company defining their objectives with respect to an eventual exit, and then executing their plan, as the following definition suggests:

Business Exit Planning is the process of explicitly defining exit-related objectives for the owner(s) of a business, followed by the design of a comprehensive strategy and road map that take into account all personal, business, financial, legal, and taxation aspects of achieving those objectives, usually in the context of planning the leadership succession and continuity of a business. Objectives may include maximizing (or setting a goal for) proceeds, minimizing risk, closing a Transaction quickly, or selecting an investor that will ensure that the business prospers. The strategy should also take into account contingencies such as illness or death.<ref>{{cite book|last=Nemethy|first=Les|title=Business Exit Planning: Options, Value Enhancement, and Transaction Management for Business Owners|year=2011|publisher=John Wiley & Sons|location=USA|isbn=978-0470905319|pages=178}}</ref>

All personal, financial, and business aspects should be taken into consideration.  This is also a good time to plan an efficient transfer from the point of view of possibly applicable estate taxes, capital gains taxes, or other taxes.

Sale of a business is not the only form of exit.  Forms of exit may also include [[initial public offering]], management buyout, passing on the firm to next-of-kin, or even bankruptcy.  Bringing on board financial strategic or financial partners may also be considered a form of exit, to the extent that it may help ensure succession and survival of the business.

In developed countries, the so-called "[[baby boomer]]" demographic wave is now reaching the stage where serious consideration needs to be given to exit.  Hence, the importance of Business Exit Planning is expected to further increase in the coming years.