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In closely held businesses, owners and managers are focused on operations and usually don’t have extensive experience buying and selling companies. However, advanced exit planning allows owners and management to quickly take advantage of strategic opportunities, such as industry consolidation, inexpensive credit or a “hot” market. Exit plans also allow owners to obtain value in the event unforeseen circumstances cause an involuntary exit.
Businesses that fail to exit plan will likely be among the estimated 70 percent to 80 percent of small businesses that are unable to sell, according to Mary Ellen Bairy, a financial journalist and researcher at Sageworks. Last year, the accounting firm PricewaterhouseCoopers found an increasing number of small business owners intend to sell rather than pass their business to family members. However, only a quarter of these businesses have any succession or exit plans.