Exit Planning for Business Owners

Exit Planning for Business Owners

Business exit planning for liquidity events, tax-efficient sale structures, post-exit retirement income, and the next chapter of wealth decisions.

A business exit is the single largest taxable event most owners will ever experience, and the planning window closes the day the LOI is signed. The decisions that move the needle — entity structure, QSBS qualification, installment sale terms, charitable strategy, asset versus stock sale, post-exit income design — are made well before the transaction, ideally 18 to 36 months out.

Compound Advisory works alongside your M&A attorney, transaction CPA, and investment banker. Our role is to plan the household side: what the exit means for taxes, retirement income, estate strategy, and the next 30 years of investment decisions.

The biggest mistake we see is owners treating the exit as a single event rather than the inflection point of a 30-year plan. The wire hits the bank account, the household's risk profile changes overnight from concentrated illiquid private equity to liquid public-market exposure, the tax bracket compresses or explodes depending on structure, and most of the planning happens after the leverage is already gone. We work backwards from that — what does the household need to look like five years after the sale — and reverse-engineer the structure.

What We Plan

  • Pre-transaction tax structuring (QSBS, installment sale, asset vs. stock)
  • Charitable giving strategy ahead of the exit (DAF, CRT, CLT)
  • Post-exit income plan and withdrawal sequencing
  • Diversification plan for proceeds across taxable, tax-deferred, and Roth buckets
  • Estate plan updates triggered by the liquidity event
  • Coordination with M&A counsel, transaction CPA, and investment banker

Pre-Transaction Tax Structuring

The largest tax-saving tools — Qualified Small Business Stock (QSBS) exclusion, installment sale treatment, charitable remainder trusts, opportunity zone strategy — all have lead-time requirements. QSBS in particular requires the household to have held qualifying C-corp stock for at least five years before the sale and to meet specific gross-asset tests. Owners who learn about QSBS after the LOI is signed have already missed it.

We start the conversation early. If the exit is two-plus years out, we work backwards from the projected close date and lay out the lead-time-sensitive structures, the gating events for each, and the decision points that need to happen now versus later.

Post-Exit Income Plan

The day the wire hits, the household goes from operating-income-driven cash flow to portfolio-driven cash flow. That transition is harder than most owners expect. The portfolio has to support a lifestyle that the business used to support, with much less control over the underlying returns. We model the post-exit income plan with the same rigor as a traditional retirement plan — withdrawal sequencing, tax bracket management, Social Security timing if applicable, IRMAA management, and a deliberate transition from concentrated business risk to diversified market risk.

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Frequently Asked Questions

When should exit planning start?

Ideally 18 to 36 months before the expected close date. Many tax-efficient structures (QSBS, installment sales, charitable trusts) require lead time. The closer you get to a signed LOI, the smaller the planning surface area becomes.

Do you work with my M&A attorney and CPA?

Yes. We do not replace your transaction team — we coordinate with them. Our seat at the table is the household side: how the deal flows through the personal balance sheet, the tax return, and the retirement plan.