Exit Planning Tools for Business Owners

Exit Planning

Quality of Earnings and Technology Costs

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Quality of Earnings and Technology CostsWhen a Quality of Earnings audit identifies deferred technology, the price can be magnified many times. Are you deferring technology costs?

A few months ago, a subscriber to our planning tools called with a tech support question. “Your software doesn’t work,” he said. After some investigation, we identified the problem. He was using a version of the underlying engine, (a part of Microsoft Office) that was four or five generations past end-of-life. When asked about his willingness to upgrade he said, “I don’t want to be forced into getting a subscription.”

(As a side note, no software developers try to develop for compatibility with end-of-life products.)

I understand completely. When Microsoft introduced Office 365 in 2011, I was as irritated as most folks were. We maintained generally up-to-date software but usually skipped a release or two. Upgrading applications happened when we began buying the next round of PCs with newer Windows operating systems. I protested the need to pay for software every year.

Clearly, we lost that battle a long time ago. Nonetheless, I can understand our client’s issue. He runs a solo practice, and his software works just fine for his relatively limited needs.

What are “True” Technology Costs?

I don’t think the same argument is typical in larger businesses, although I still hear it regularly. True hardware and software costs should be measured by employee productivity.

Begin with hardware. Keeping an old computer alive isn’t efficient. (And this is from someone who drives a 17-year-old car!) Here’s how a managed services client of mine described what’s commonly known as the “break/fix” portion of his business for a customer who didn’t want to “subscribe” to managed IT services.

“We get a call that the printer isn’t working and dispatch a technician. We haven’t looked at that particular PC in eighteen months. Employees have loaded new programs. They’ve done some, but not all of the required updates. The technician performs the updates, reinstalls the printer drivers, and gets it working after about 2 hours.”

“When we invoice the tech’s time, the customer has a fit. ‘I could have bought a whole new computer for that much!’ he says.”

No fooling. That’s why break/fix has become pretty much the domain of a walk-in trade for storefront technicians. Most IT companies can’t afford to do it anymore.

Indirect Technology Expense

More importantly, what did the malfunction create in indirect costs to the company? What’s the cost of the employee who was idle, the job that wasn’t printed, and the boss’s time to fight over the invoice?

Let’s say for a simple illustration that an office employee’s fully loaded cost is $52,000 a year, or $1,000 a week. Buying a new PC every three years is about $500. How much time does the employee have to save to pay for the newer computer?

The answer is a bit less than 7 hours… a year. That’s 2 minutes a day. So, the real question becomes “Will a newer computer save this employee 2 minutes a day?” It may not be immediately obvious, but if the tech support company is charging five times the employee’s salary ($150 an hour,) saving even one incident over the next three years more than covers it.

Technology Costs in Quality of Earnings Audits

Technology costs have become an integral expense item for almost every business. That hasn’t escaped the notice of buyers, especially professional buyers.

You can expect a Quality of Earnings (QoE) audit to encompass software licensing and subscriptions, hardware and equipment, IT support and maintenance, cloud storage, telecommunications (bandwidth and redundancy,) cybersecurity, and data protection insurance.

If a company is still working with the old “If it fails, then we’ll replace it,” you can expect a substantial downgrade of its EBITDA. A dozen new PCs, a server, new software licenses, cloud storage, annual costs for a bigger Internet pipe, and a second broadband carrier could easily cost $100,000.

Depending on the multiple being paid, each $100,000 deducted from the EBITDA means 3, 4 or 5 times that amount deducted from the price. That will get the seller’s attention, but by then it will be too late.

Technology costs for current (not cutting-edge) equipment and software are money well spent both now and at the time of a sale. Expect and budget them on a regular cycle. Deferring the expense might just be the definition of “Penny wise and pound foolish.”

John F. Dini develops transition and succession strategies that allow business owners to exit their companies on their own schedule, with the proceeds they seek and complete control over the process. He takes a coaching approach to client engagements, focusing on helping owners of companies with $1M to $250M in revenue achieve both their desired lifestyles and legacies.

The Inexperienced Advisor – An Exit Planning Horror Story for Business Owners

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This is a cautionary tale for business owners—one that’s “based on a true story.” The facts are real, although the exact sequence of events might raise questions if the IRS were to take a closer look.

A small business owner received a $1,000,000 offer to sell his company. He had already been thinking about retirement, and the chance to cash out felt like a perfect opportunity. His original plan had been to sell the business to a long-time employee through a promissory note, but that changed when the cash offer came along.

The business’s profits had always been modest, and the employee couldn’t match the offer. But the owner felt deep appreciation for the employee’s loyalty and past contributions. The employee already owned 10% of the stock, and the owner decided to reward him further by gifting an additional 10% just before the sale.

When the deal closed a few weeks later, they divided the proceeds: the owner received $800,000, and the employee got $200,000.

Here’s where things began to unravel.

The company’s tax preparer was a long-time friend of the owner—also his bookkeeper—who had served him faithfully for over 30 years. Their arrangement worked well for general business needs, and the owner saved money on fees. But the employee used a different advisor. And when tax season rolled around, that advisor raised some critical issues.

The Inexperienced Advisor, eyeglasses on top of a tax form

Let’s break it down.

The Letter of Intent was signed in January. The additional 10% stock was granted in February. The transaction closed in March. The valuation had been set by the sale offer, but little formal documentation existed for the transfer. The employee’s advisor flagged that the gifted stock constituted a $100,000 bonus—meaning it was taxed as ordinary income. At a 25% tax bracket, that single item triggered a $25,000 IRS bill.

Next came the issue of the company’s structure-

For years, the tax preparer had advised switching to an S Corporation, but the owner never followed through—it seemed like too much hassle. So the company remained a C Corporation and was subject to 21% corporate tax before distributions.

That meant the employee’s $200,000 had to be recalculated. His share was now about $158,000 after corporate taxes.

Of that amount, the original 10% was eligible for long-term capital gains treatment (20% rate), but the recently gifted 10% was double taxed: as short-term capital gain (at his 25% rate) and hit with a 20% parachute payment excise tax because of its proximity to the sale.

He paid nearly $55,000 in taxes just on that second 10%. And the hits kept coming.

With total compensation now over $200,000, the employee’s payout was subject to the 3.8% Net Investment Income tax (the “Obamacare” surcharge). And he still owed that initial $25,000 from the stock bonus.

When all the math was finished, his $200,000 “windfall” ended up being worth only $70,746.

That’s an effective tax rate of nearly 65%.

And the owner? He was double taxed, too. His “cut-rate” accounting services and the decision to avoid S Corporation status ended up costing far more than they saved.

Could it have gone differently? Absolutely.

For a relatively small investment in expert guidance, they might have restructured the transaction. For instance, compensating the employee with a cash bonus instead of stock would have made the payment deductible to the company, taxed only once as ordinary income to the employee.

But none of that was considered—because there was no experienced advisor at the table.

If you’re considering selling your business, don’t go it alone.

Exit planning isn’t just about getting a good offer—it’s about protecting your value and avoiding costly mistakes. Engage with a seasoned advisor who understands the tax, legal, and strategic layers of a business transition.

The cost of advice is small compared to what it could save you.

-Special thanks to Steven A. Bankler, CPA, for his help with this article.

John F. Dini develops transition and succession strategies that allow business owners to exit their companies on their own schedule, with the proceeds they seek and complete control over the process. He takes a coaching approach to client engagements, focusing on helping owners of companies with $1M to $250M in revenue achieve both their desired lifestyles and legacies.

Creating the Plan to Eventually Depart Your Business

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Creating and Editing Your Plan

I am now 66 years old. It seems like a strange statement to write here. Where did that time go? I have a grown son and my spouse and I are now empty nesters. It is just us now, but we do get to enjoy some delightful visits from my son when he can get away from his own business to join us. Does that sound familiar to you?

We will all be addressing a similar outcome as we age into our later years. This will also affect our busines lives. All business owners will exit their businesses, either by choice or as circumstances dictate (e.g., death, incapacity). Ideally, we want to exit on our terms:

  • Leaving our businesses in the hands of successors that we have chosen
  • For the money we need and want
  • On a date we pick

In the public presentations that I get to do at trade shows and association meetings, I get to see an aging population where half of the attendees either have white hair or no hair (and I’m in that latter half)! We are an aging industry population, and I am guessing that you see the same thing in your own industry meetings. Is there a viable transition plan that we can implement moving forward?

In construction, we create building plans that map-out a vision that we construct for our clientele. We amend that plan as needed during construction because things do change during the construction process. We adapt to those changes and we keep moving. It’s part of the business model. Question – can we adapt a similar approach and do the same thing with our remodeling business?

There are 3 Universal Goals in any Successful Business Transition:

  1. Financial: after you leave the business, how much money do you want annually for the rest of your life and your spouse’s life?
  2. Departure Date: when do you want to leave your business? And what does “leave” mean?
  3. Successor: whom do you want to be the new owner of your company?

Universal Goal 1: Getting what you want

While we view financial security as a requirement for a successful exit, a second, related financial goal is the amount of annual income you want which will allow you to enjoy the post-exit lifestyle you envision. This second financial goal may be discretionary, but for many owners, it is important enough that they will postpone their exits until they can achieve it. As is true of all decisions in planning for the future of your ownership, the choice is yours.

In previous posts, I have already recommended that you work with a financial planner to determine what your financial goal is. I will continue to argue for the benefits of working with best-in-class advisors from several disciplines. But to quantify what it will take to live your dream, I repeat: rely on an experienced financial planner to establish your financial security wants and your financial security needs. As your planning moves forward, they can also help you bridge any gaps by providing investment advice.

Universal Goal 2: Leaving when you want

Establishing a specific departure date gives you and your advisors a time frame to plan and take the action necessary to prepare your business for your exit. This does not mean you must exit on the first day you choose. Just like amending a construction plan, you may decide to stay in the business longer than anticipated by choice. The choice is yours, but only if your business is ready for you to exit it.

Universal Goal 3:Transferring ownership to whomever you want

The third and last universal goal that I ask owners to establish at the outset of the exit and transition planning process relates to a successor. Whom do you want to succeed you: a child, a partner, or a third party? Which type of successor will best help you reach your goals?

At the outset of this planning process, you may not have a successor preference. You can postpone that decision until after you quantify your asset gap and begin to bridge it.

Modifying Your Goals:

When owners work with advisors to plan their exits, they think more deeply and clearly about what they ultimately want to accomplish for themselves, their families, and their businesses. It is not unusual for owners, as they gain clarity, to modify their goals. Making changes early in the process is more time and cost-efficient than changing course once a plan is finalized and implementation is underway.

Values-Based Goals:

The three universal exit goals are common to all owners. These may be the only goals you seek in exiting your business, but many owners have additional goals based on sentiment, attitudes, or feelings.

Values-based goals tend to be non-monetary. They also tend to be less tangible and more heartfelt. But they are no less important to owners than the goals we can measure objectively.

The following list of common values-based goals is by no means exclusive or all encompassing. You may wish to add your own:

  • Family Harmony
  • Owner Legacy
  • Acknowledging Employees
  • Taking the Business to the Next Level
  • Minimizing Taxes
  • Maintaining Culture
  • Community Involvement
  • Quality Retirement
  • Charitable Impulses

To uncover your values-based goals, ask yourself the following:

  • What is my vision for my company without me?
  • What is my vision for myself without my company?
  • Are my values-based goals important to either vision?

A great question you may wish to ponder is, “what are the likely consequences to others of transferring my ownership as I intend?” Discussing this topic with your spouse, children, advisors, or perhaps an owner who has already exited can provide insights into what will happen to your business, and to you after you leave. As your business has been your focus for so many years, where will you turn that focus after departing your business? What lies ahead?

Conclusion:

Setting goals is the most important step you can take in the entire exit planning process. I believe it is the most important action you will take in the rest of your business-owning career.

Once you set your goals and quantify your existing resources, you complete the first phase of the exit planning process. At that point, you will know how close you are to attaining your goals, how far you must go, and how long it might be before you cross the finish line.

Takeaways:

  • You must set concrete goals. Unless you do, you will float aimlessly along instead of pulling with all your strength and cunning toward your desired destination
  • Goals drive action. Coordinated, focused action requires specific goals
  • Financial independence is the acid test of all successful exit plans. Unless your plan delivers financial security, it’s not a successful exit
  • Base your three universal goals on facts, not assumptions
  • Business exits take time. To determine how long it will take you to exit, you must start with a clear understanding of where you want to end up. The sooner you start to plan your exit, the more time and options you have to harmonize goals, avoid obstacles, minimize risk, maintain control, and increase business value

You do not need to reinvent the wheel.

David Lupberger, CEPA is the President and Owner of Remodel Force. He is a nationally recognized speaker, author, and consultant who helps remodelers and contractors grow longer-lasting, more profitable businesses by developing lean and mean business systems. David believes that consistent results occur only with proven systems. He has worked with hundreds of contractors over the past 30+ years to increase their sales by expanding existing client relationships and develop lifelong clients.

What Business Owners Should Know from the 5th Annual Exit Planners Survey

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Between February 1 and March 2, 2025, ExitMap conducted its 5th annual survey of professionals who help business owners plan successful exits. This is the only survey that gathers insight across multiple advisory specialties—offering a wide-angle view of the professionals supporting entrepreneurs like you during one of the most critical transitions of your life.

The survey included 30 questions and was distributed to over 7,000 experienced advisors worldwide. These are professionals with recognized credentials in exit planning, active roles in professional organizations, or who publicly position themselves as specialists in business transition. We received 434 responses from advisors in eight disciplines, representing six countries and 47 U.S. states, resulting in a 99% confidence level and a margin of error of 3.6%. Statistically, the results offer a strong picture of the current state of the exit planning landscape.

What Does This Mean for You as a Business Owner?

Exit planning is no longer something only for ageing Baby Boomers. It has evolved into a strategic planning tool for many owners in Generation X and even younger. Whether you’re planning to exit soon or simply want to be ready for future opportunities, exit planning helps maximize business value and align your business with personal and financial goals.

Since the pandemic, the number of advisors in this field has grown by 70%, with a 23% increase just last year. That expansion reflects increasing demand—but surprisingly, most advisors say they’re busier than ever. In 2024, 88% reported as many or more planning engagements compared to the previous year.

What Are Exit Planning Advisors Saying?

    •70% charge separate fees for exit planning services—this work is specialized and structured.

    •96% say exit planning leads to additional support for their clients—like tax strategy, estate planning, and business improvement.

    •57% expect to earn over $50,000 this year from exit-related work.

    •69% focus on companies valued under $3 million, making their services accessible to smaller businesses.

    •80% work with clients remotely, so location isn’t a barrier.

    •Over half are 55+ years old, indicating deep professional experience.

Why an Advisor is Essential in Your Exit Strategy

If you’re like most owners, your business is your largest and least liquid asset. The emotional and financial stakes are high when you’re preparing to exit. The growing network of experienced advisors is ready to guide you through this complex process—helping you make informed decisions, increase business value, and ensure that your exit supports your long-term personal and financial goals.

Planning early gives you more strategic options. Unfortunately, many owners delay until a transition is urgent, reducing flexibility and potential outcomes. Advisors also report challenges in coordinating across specialties and maintaining long-term planning engagement, reinforcing how valuable a committed, collaborative advisor can be throughout the journey.

Bottom Line

The transition of Baby Boomer-owned businesses—estimated at $10 to $17 trillion in assets—is driving rapid growth in exit planning. Many of these are family-run or bootstrapped businesses that have grown into significant mid-market companies. Exiting these businesses often requires a team: financial planners, CPAs, attorneys, brokers, bankers, and more.

As the field grows, so does the availability of structured planning tools like those from ExitMap, which advisors use to help owners like you take the first step. If a future transition is anywhere on your horizon, the time to start planning is now—and the first move is finding an experienced advisor to help you do it right.

John F. Dini develops transition and succession strategies that allow business owners to exit their companies on their own schedule, with the proceeds they seek and complete control over the process. He takes a coaching approach to client engagements, focusing on helping owners of companies with $1M to $250M in revenue achieve both their desired lifestyles and legacies.

The Exit Planning Fallacy – A Business Owner’s Perspective

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One of the most common sales pitches you might hear from someone claiming to help you “enhance value” goes something like this:

“I’ve reviewed your company and believe it’s worth $4.2 million today. With the right planning, it could be worth $7.7 million. Would you rather exit with $4.2 million or $7.7 million?”

That’s not really a question—it’s a setup. Of course, no business owner would willingly choose the smaller number. But the real issue isn’t which number you prefer. It’s what it actually takes to bridge that gap—and whether you’re being given a full picture.

Are You Falling for the Planning Fallacy?


There’s a psychological term for this overly optimistic way of thinking: the planning fallacy.

A private equity investors group I follow, Chenmark.com, once cited a study published in the Journal of Personality and Social Psychology that perfectly illustrates the concept:

From a psychological perspective, the planning fallacy can perhaps be studied most profitably at the level of daily activities. Consider one familiar example: Academics who carry home a stuffed briefcase full of work on Fridays, fully intending to complete every task, are often aware that they have never gone beyond the first one or two jobs on any previous weekend.

The intriguing aspect of this phenomenon is the ability of people to hold two seemingly contradictory beliefs: Although aware that most of their previous predictions were overly optimistic, they believe that their current forecasts are realistic. It seems that people can know the past and still be doomed to repeat it.

What’s fascinating is that they know this pattern. Yet, every weekend, they’re sure this time will be different. Business owners do something similar: despite knowing how long things usually take (and how unpredictable growth can be), we still believe “this time” will follow our best-case forecast.

You may hear that big valuation potential and think, “Yes, that’s what I’ve always wanted—to grow the company by 83%! I just needed a plan.”

But a plan alone isn’t enough. It’s a start—but not the whole story.

What Really Closes the Gap?


Let’s reframe that optimistic pitch with a more realistic one:

“To grow from $4.2 million to $7.7 million in five years, you’ll need proper planning, dedicated effort, some strategic hires, and reinvesting a significant portion of your profits. That requires growing the business 19% annually—starting immediately. That’s more than double your best year to date. If you spend a year building that foundation first, then you’d need to grow at least 25% annually over the next four years. If you keep growing at your best year’s rate of 7.5%, it will take over 12 years to reach that goal.”

Those are the facts. And the reality is that very few business owners hit those growth rates without serious changes—and trusted advisors to help them.

The Power of Perspective (and the Right Guide)


You may have a solid company. It supports your lifestyle, your employees, and your reputation. Maybe you’ve even dreamed of taking it further. But the risks, the effort, or the lack of a clear roadmap have held you back.

That’s exactly where experienced advisors come in—not to promise easy gains, but to help you map a realistic path to your goals. They help align what you want (your proceeds), with what you’re willing to do (your effort), in the time you have left (your exit timeline).

In our work, we use a Value Gap coaching model that considers four essential pieces:

1. Current business value
2. Your desired outcome—not just “more,” but a specific number
3. The timeframe in which you want to exit
4. The required growth rate to get there

Often, once those last two are on the table, the conversation changes. It’s not just about the money—it’s about what you’re willing and able to do to get there.

The real planning fallacy? Believing it’s just about hitting a number. The truth is, getting the outcome you want depends on understanding the full picture—and working with an advisor who helps you navigate it honestly, strategically, and with clarity.

John F. Dini develops transition and succession strategies that allow business owners to exit their companies on their own schedule, with the proceeds they seek and complete control over the process. He takes a coaching approach to client engagements, focusing on helping owners of companies with $1M to $250M in revenue achieve both their desired lifestyles and legacies.