Business Transition Planning FAQs

Why do I need a formal business transition plan?

A formal business transition plan puts the goals, priorities, and strategies in place for a successful transition. Without a defined plan, business owners leave their personal and financial future to chance.

I’m not sure I’m ready to transition out of my business. So how do I know when the time is right?

Transitioning out of your business is all about setting and reaching goals. Have you accomplished what you set out to do with your business? Do you have dreams of scaling up /diversifying/entering other geographies for your current company? Do you have plans to do things other than running your existing business?

I know my business better than anyone else. So why shouldn’t I handle the transition plan and process myself?

This is a complex and personally challenging process. It’s tough to do it alone and get it right. If you have legal, tax, or risk management issues, you must use professionals familiar with these areas to take care of them.

Who are the experts on a transition team?

Depending on what phase you are currently in, any of the following may be involved: Business Advisors, CA, Company Secretary, Insolvency Practitioners, and bankers.

Why do I need a transition team?

In the start-up stage, it can help you to cut down the learning curve.

If it is the growth stage, you will be moving out of your comfort zone, as the likelihood of the wrong move may hound you, and having the right advisors on your side helps to save you from slipping into distress. Further execution of expansion projects requires specialised skills, which will not be found in your regular operating team in the present business. For such performance, technical experts bring in a lot of value in terms of low cost and/or lesser timeline.

If you are transitioning out of your business, otherwise exit by sale, you need experts in relevant areas to help you get the most cash for your business. Using experts will cut down the enormous amount of time you would otherwise have to spend planning, marketing, talking, negotiating, and working to find a potential buyer who might end up walking away. Unless you have been through a merger, acquisition, or divestiture, transition planning and execution are unlike anything you’ve ever done.

Likewise, in all transition stages, it is highly desirable to get experts with proven credentials on board.

Do you know where I can find these experts?

Even if you have an accountant or broker, they may not be uniquely qualified to assist you with the transition. It would help if you had experts from your field. Please ask your accountant, investment banker, or industry peers to find experts who deal extensively with business transitions.

It is always desirable to study their background and identify roles for them before onboarding.

What information do I need to prepare for my transition?

It depends upon the context of the transition. For instance, the start-up stage is more on entrepreneurs’ information matters; in the growth stage, the emphasis is on business and future growth opportunities, whereas in the exit stage emphasis on disclosures & compliances is high.   


Financial documents:
✓  A minimum of five years of financial documents
✓  Audited financials for three years
✓  Pro-forma sales and cash flows for two years
✓  Three years of tax returns-IT, sales tax, service tax
✓  Company insurance details
✓  Personal financial information (account statements, complete copies of tax returns, estate documents)
Customer lists (shows the history of longevity)
Vendor lists and relationships
Operational systems and procedures for everyone and every part of your business
Legal corporate documents
Contracts with vendors, suppliers, customers, and clients
Intellectual property rights and assets, if any
Value statements on competitive position and critical strengths
What if I have already completed some parts of the process?
Experts can become involved at any point in your transition. These experts can review the work you have finished, provide recommendations and take the necessary actions to get you on the right track. A financial planner can help with wealth management even if you have completed your transition.
How do I get started?
The four phases of proper business exit planning are:
1.     Pre-Sale Phase
2.     Positioning for Sale
3.     Transaction Phase
4.     Wealth Management
Following the above Four Phases of a Successful Business Transition, use the following process to guide you through your transition.

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