Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Business Owner Burnout Emphasizes Importance of Exit Strategies

Author: Fred D. Zemel

Date: May 20, 2021

Key Contacts

Back
Business Owner Burnout Highlights Importance of Exit Strategies

The COVID-19 pandemic has taken a toll on business owners, causing many burned out entrepreneurs to ponder an early retirement...

The COVID-19 pandemic has taken a toll on business owners, causing many burned out entrepreneurs to ponder an early retirement. If you are seriously thinking about retiring or selling your business in the near term, it is imperative to have an exit strategy in place.  

Survey Reveals Business Owners Are Pondering Early Retirement

Many large business owners have escalated their retirement plans in the wake of the pandemic, according to the latest Business Owners’ Outlook survey by Wilmington Trust and M&T Bank. It found that many business owners are experiencing burnout and exhaustion, resulting in a high percentage moving to retire earlier or looking to sell their companies.

The survey data indicates that the number of owners who say they plan to retire sooner than expected has doubled since August 2020. Among owners of larger businesses, the survey revealed a 110% increase since last August; meanwhile, the number of owners of smaller businesses who plan to retire sooner has jumped 100%. In that same time period, the percentage of owners of larger businesses who say the pandemic has caused them to sell their business sooner than expected has increased 31%.

Interestingly, the survey found that business owners are also less optimistic that their wealth will be well-managed in their absence. In March 2020, 50% of all entrepreneurs were very confident that their personal and business assets would be well managed in their absence.  That figure dropped to 34% in the latest survey.

Importance of Exit Planning for Business Owners

While it may be possible to accelerate the timeframe for selling your business, it is still imperative to have a plan in place. Without careful planning, you could risk losing everything you have worked so hard to build.

When developing an exit strategy, there are numerous issues to consider. Below are a few that should be at the top of your list:

  • Evaluating your finances: One of the most important steps is to determine the value of your business. Equally important is to determine how much money you will need to gain from the sale of the business to be financially secure and how you want that money to be paid, i.e. lump sum, installments, etc.
  • Considering your options: There are several different types of exit strategies. The most common is to sell the business, whether it be to a family member, management/staff, or a third party. Other options include merging with another business, conducting an IPO, and closing/liquidating the business. It is important to carefully evaluate what strategy is your best option, as the decision may be influenced by a wide range of factors, including the nature of your business, the economic climate, and your timeframe for exiting the business.
  • Consulting with your advisors: Many business owners fail to appreciate all of the issues that must be addressed in an exit/succession plan, including the legal and tax implications. It is crucial to involve all of your key business advisors in the process, including your accountant, attorney, investment advisers, tax professionals, and insurance agents.
  • Compensating your investors: As you develop your strategy, you will need to discuss your plans with your investors and stakeholders. Among other issues, the plan should address how and when investors will be repaid.
  • Training your successor: Training a successor to take over your duties should start as soon as possible. The most effective succession plans appoint, train, and install successor(s) before they are needed. Allowing the new leader to take over responsibilities over time and while current executives are still available to provide guidance can help ensure a smooth transition. Of course, it can be difficult for current leaders to let go of the reigns and allow the successor to learn from his or her mistakes.
  • Informing your employees/customers: If you plan to exit the business sooner rather than later, it can be beneficial to keep both employees and clients in the loop. Informing key employees, clients, and business partners about your plans helps preserve good will and can make for a smoother transition to new management/ownership.

If you are not yet ready to walk away from your business, you should still have an exit strategy in place and a fairly good idea of how much your company is worth. Having a business valuation and exit plan in place helps ensure that you will be prepared to act when the time is right.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Fred Zemel, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business post image

The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business

Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]

Author: Dan Brecher

Link to post with title - "The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business"
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1 post image

Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1

The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]

Author: Brian D. Spector

Link to post with title - "Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1"
How Understanding Bankruptcy Trends Can Benefit Your Business post image

How Understanding Bankruptcy Trends Can Benefit Your Business

The bankruptcy legal landscape presents both challenges and opportunities for businesses navigating financial distress. Understanding current bankruptcy trends can help businesses make more informed and strategic decisions. Corporate Bankruptcy Filings Trending Upwards Bankruptcy filings continued to trend upwards in 2024. According to statistics released by the Administrative Office of the U.S. Courts, personal and business […]

Author: Brian D. Spector

Link to post with title - "How Understanding Bankruptcy Trends Can Benefit Your Business"
SEC Takes Actions Against Issuers for Failure to File Form D post image

SEC Takes Actions Against Issuers for Failure to File Form D

In December, the U.S. Securities and Exchange Commission (SEC) announced charges against two privately held companies for failing to file a Form D notice, which is generally utilized for exempt securities offerings. Here, the SEC’s enforcement sends a strong message: compliance with regulatory requirements is not optional and failure to comply can have significant consequences. […]

Author: Kenneth C. Oh

Link to post with title - "SEC Takes Actions Against Issuers for Failure to File Form D"
Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda post image

Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda

On February 14, 2025, the Office of General Counsel (OGC) of the National Labor Relations Board (NLRB) under Acting General Counsel William B. Cowen issued Memorandum 25-05, “New Process for More Efficient, Effective, Accessible and Transparent Case handling.” The Memorandum rescinds nearly all of the Memoranda issued by his direct predecessor, Jennifer Abruzzo, setting the […]

Author: Matthew F. Mimnaugh

Link to post with title - "Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda"
What Are FIRPTA Withholding Requirements? post image

What Are FIRPTA Withholding Requirements?

If you purchase real property from a foreign person or entity, you may be required to withhold taxes from your payment to the seller under the Foreign Investment in Real Property Tax Act (FIRPTA). The federal tax law is designed to ensure that foreign sellers pay any applicable capital gains tax on profits realized from […]

Author: Jesse M. Dimitro

Link to post with title - "What Are FIRPTA Withholding Requirements?"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!

Please select a category(s) below: