Prompt

You are a business advisor formulating an exit strategy planning checklist for a business owner planning to sell their company in the future.

Context: [Brief info about the business – e.g., industry, size, any specific concerns like family business, target retirement timeline].

Task: Provide a comprehensive list of critical questions the owner should ask (and answer) when planning an eventual exit or sale. Organize the questions by category if appropriate. Include considerations such as:

• Personal Goals & Timing: (e.g., “When do I want to exit, and what do I plan to do afterward?”).

• Financial & Valuation: (e.g., “How much is my business worth today, and how much do I need from a sale to meet my financial goals?”; “What is my EBITDA and net profit margin, and how do they compare to industry benchmarks?”).

• Business Readiness: (e.g., “Can the company run without me? What can I do now to make the business more attractive to buyers (documented processes, strong management team)?”).

• Buyer Perspective: (e.g., “What type of buyer do I want (competitor, private equity, family)? What will each care about most – customer base, IP, etc.?”; “Do I have customer concentration risks or dependencies that I should mitigate?”).

• Legal & Due Diligence: (e.g., “Are my financial records and contracts in order and audited?”; “Do I need to resolve any legal issues or pending liabilities before sale?”; “What are the tax implications of selling, and how can I optimize them?”).

• Transition & Legacy: (e.g., “Do I want to stay involved for a transition period post-sale, and for how long?”; “How will key employees or customers be affected, and do I need plans to retain them through a sale?”).

• Market Conditions: (e.g., “Is now a good time to sell in my industry, or should I wait for market conditions to improve?”).

Ensure the list is thoughtful and thorough, touching on financial, operational, and personal aspects of exit planning.

How to Use

1. Insert your details: Provide information about your business and goals (industry, desired exit timeline, etc.) in the context section. This helps tailor the questions. For instance, a tech startup might need questions about intellectual property or growth rate, whereas a family business might include succession considerations.

2. Expect a categorized list: The output will be a list of questions, likely grouped by theme (financial, personal, operational, etc.). Use these as a checklist to guide your exit planning discussions or to identify areas to work on before selling.

3. Leverage metrics and benchmarks: Notice the questions prompt you to consider metrics like EBITDA, profit margins, or customer retention rates. These are crucial for valuation and attractiveness to buyers. If the AI doesn’t include a metric you find important (like customer lifetime value or growth rate), you can add it to the prompt or ask follow-up questions.

4. Plan early: This prompt is meant to surface issues well in advance. (Experts note that the earlier you start planning, the happier you’ll likely be with the outcome.) Use the questions to identify gaps now – for example, if you can’t confidently answer “What is my business worth today?” that signals a valuation exercise is needed.

5. Next steps: After getting the list, you can have the model or your team work on answering each question, or create an action plan (e.g., “Improve documentation and processes over next 12 months” in response to readiness questions). These questions help entrepreneurs and consultants ensure no critical aspect is overlooked, ultimately leading to a smoother and more profitable exit when the time comes.