This document discusses succession planning, estate planning, and exit planning for business owners. It outlines the key differences between these processes. Succession planning focuses on transferring leadership from current to future management to ensure the ongoing viability of the company. Estate planning aims to transfer ownership from current to future shareholders. Exit planning involves determining the owner's plan to leave the business, usually transferring both ownership and management responsibilities. The document emphasizes that succession and exit planning are critical given statistics on family business survival rates and the fact that many owners lack formal plans. It provides overviews of the key steps in succession and exit planning processes to help owners successfully transfer their companies. The role of CPAs is highlighted as they are well-positioned to coordinate the

1. BUSINESS EXIT &
SUCCESSION PLANNING:
A VALUABLE SERVICE TO ADD TO YOUR CPA PRACTICE
B U S I N E S S E X I T A N D S U C C E S S I O N
P L A N N I N G C O M M I T T E E
S E P T 2 0 1 3

2. SUCCESSION VS. ESTATE VS. EXIT
PLANNING
Estate Planning is a process designed to successfully transfer company
ownership (wealth) from current shareholders to future shareholders (or
others). It is designed to address the personal goals of shareholders and is
structured to achieve the most economic and tax efficient result possible.
Succession Planning is a formalized process to successfully transfer
company leadership from Current Management (CM) to Successor
Management (SM). It is designed to ensure the ongoing viability of the
company.
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3. SUCCESSION VS. ESTATE VS. EXIT (CONT’D)
• Exit Planning:
process an
entrepreneur
goes through to
determine his/her
plan to leave the
business
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This usually involves
the transition of both
ownership and
management
responsibilities and
should usually be done
before estate and
succession planning.

4. WHY SUCCESSION PLANNING?
Overwhelming raw statistics from a number of studies and articles:
They need help. Consider the rates of succession statistics:
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• Family businesses comprise 80-90% of all business enterprises
in the U.S.
• 40% of family companies say they will transition leadership in
next five years
• 88% say same family(ies) will control business in five years
• 30% survive into second generation
• 12% survive into third generation
• 3% operate into fourth generation

5. WHY SUCCESSION PLANNING? (CONT’D)
• 40% of family companies that will transition
in next five years are without a “how to” plan
• Less than 2/3 of significant holders in family
business know senior generations’ share
transfer intentions
There appear
to be some
reasons why
they need help
• 2007 American Family Business Survey:
• #1 of top 10 challenges facing Family
Businesses today = succession
• Same survey: spouse is closest advisor;
accountant is next
Owners know
the issue; and
CPA’s are
perfectly
positioned
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6. WHY SUCCESSION PLANNING? (CONT’D)
Without a plan or process, most
entrepreneurs and management
teams hope succession will
happen--
hope is not a strategy
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7. WHY EXIT PLANNING?
Exit Planning is a proven process
that can maximize the financial
return, minimize the tax
liability, plan for contingencies
and increase the likelihood of a
successful transfer of a business
85% of all small business
owners do not have an exit
plan, a wealth management
plan, and/or an advisory team
to assist them
Very few start the process early
enough to achieve the maximum
benefit of exit planning
Most entrepreneurs wait too
long; instead make the “end
game” part of your overall
operating strategy
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8. WHY EXIT PLANNING? (CONT’D)
A written Exit
Plan based on
the owner’s
objectives
An experienced
team of
advisors to
design and
implement the
plan
Cash flow and
a quantified
business value
A strong
management
team in place
Time
Ingredients of a Successful Exit Plan:
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9. WHY EXIT PLANNING? (CONT’D)
Most business owners spend more time
planning a family vacation than how to exit
from their business
This is not due to a lack of desire or
intelligence. It is simply because they don’t
know how or where to begin
The vast majority of owners are unaware
there is a specific planning and
implementation process that can help ensure
they achieve their objectives
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10. • Has good feel for
leadership style of
potential successor; can
bridge the generations
(and keep the client)
• Will be more company
versus personality/ family
member focused
WHY THE CPA’S ROLE IS CRITICAL
Can help
document the
overall
processes
Coordinates other
outside advisers (legal,
estate, asset managers,
etc.)
Provides a very objective
viewpoint
Inner Sanctum Access- you are the “trusted advisor”;
you should be a critical piece of the Succession and
Exit Planning Process
CAPABLE OF
“OWNING”
Knows the business and the numbers
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11. SUCCESSION PLANNING PROCESS
Seven step documented process to achieve
successful transfer from Current Management
(CM) to Successor Management (SM):
Determine how the
succession planning
process will work
including a
communication plan
Consider the view of
the CM including
objectives, timing
and personal
matters
Determine the
financial needs of
the CM who is
retiring and the
viability of the
business to support
those needs
Consider the
potential SM
including
capabilities, comfort
with supervising
former peers and
role acceptance
Understand the role
family members will
play in the company
including those
outside the business
and future family
members
Maintain a process
which provides for
periodic reviews to
determine viability of
the Succession Plan
including after the
plan is in place and
is being executed
Incorporate an
appropriate
methodology for
transferring wealth
in accordance with
current
shareholders’
desires
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12. EXIT PLANNING PROCESS
Identify
owner exit
objectives
Quantify
business
and
personal
financial
resources
and needs
Maximize
and protect
business
values
Ownership
transfer to
third
parties
Ownership
transfer to
insiders
Business
continuity
Personal
wealth and
estate
planning
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13. NEXT STEPS?
Business Exit & Succession Planning involves many skillsets and
capabilities; some of which just come from experience. The best and
easiest thing to do is to join the Business Exit & Succession Planning
Committee of the NYSSCPA. The purpose of this Committee is to
educate CPA’s on these subjects.
If you are interested, please reach out to the Chairman, Bernie Leone or any
committee member listed on the NYSSCPA website.
bleone@withum.com
212-829-3207
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