EXIT READY, EVEN IF YOU'RE NOT: SIX TOOLS TO PROTECT BUSINESS VALUE

ValueLab Insight: Structuring your business exit is not just smart. It's essential.

Every entrepreneur will exit their business – whether by choice or by chance.

Yet surveys by the Exit Planning Institute show only 20–30% of businesses that go to market, manage to sell. Leaving 70–80% unable to capitalize their wealth and years of effort. Business owners commonly assume they’ll sell or retire on their own terms, but statistics disagree.

Many exits happen suddenly: A heart attack, a disabling accident, a dispute between partners or a change in circumstance. One global survey found 99% of owners agree exit strategy is important, but 80% have no written plan, a planning gap that opens the door to disaster.

So, how do you exit right?

Here are six tools every business owner should have on the table long before it’s time to walk away:

1. Shareholders’ Agreement (The Business Pre-Nup)

“What happens if my partner dies or wants to leave?”

Without a formal agreement, shares can fall into the estate, go to uninterested heirs, or be fought over in court. A shareholders’ agreement defines exactly how shares transfer, to whom, and under what terms. Whether for death, retirement, or exit.

·        Protects control.

·        Reduces conflict.

·        Clarifies rights and obligations.

2. Buy-Sell Agreement

“If I die, how will my family get their share?”

A buy-sell agreement, backed by insurance, ensures a lump sum is available to buy out an owner’s share, without draining the business or triggering a fire sale.

·        Supports family liquidity.

·        Maintains business continuity.

·        Prevents valuation disputes.

3. Put & Call Options

Deal with Deadlock Before It Starts.

“We can’t work together anymore, but no one wants to leave.”

These options give either party the right to trigger a buyout. It’s the corporate equivalent of a shotgun clause.

·        Avoids legal battles.

·        Forces resolution.

·        Preserves value.

4. Conversion Rights & Preferred Equity (Structure with Flexibility)

“I want to retire gradually, not all at once.”

Conversion rights allow equity to be converted to debt or preferred shares, enabling phased exits, timed payouts, or investor-specific exit rights.

·        Enables tailored exit plans.

·        Supports investor confidence.

·        Helps with tax and liquidity planning.

5. Valuation Framework (Know the Number Before the Fight)

“Everyone has a different idea of what the business is worth.”

Pre-agreeing on a valuation methodology (formula, external valuation, or blended approach) prevents disputes when an exit is triggered.

·        Speeds up transactions.

·        Supports estate and tax planning.

·        Ensures fairness.

6. Estate Planning Alignment

Sync Your Will with Your Business

“My will says one thing. The company says another.”

If your shareholders’ agreement mandates a buyout, but your will leaves shares to your children, you’ve created a legal trap. Aligning your business documents and estate plan ensures a clean handover.

·        Avoids legal conflict.

·        Preserves wealth.

·        Ensures business continuity.

Three Real-Life Scenarios:

The Pretoria Manufacturing Firm

A 55-year-old sole director died unexpectedly, with no shareholders’ agreement or secondary signatories. Operations stopped, accounts were frozen, and family feuds erupted. The business sold under value just to unlock cash. [Link: alBarakaBnk]

Verdict: A simple buy-sell agreement could have prevented this.

The Cape Town Property Siblings

Three siblings co-owned a property company through trusts but had no exit or dispute-resolution framework. Years of conflict ended in liquidation and a fire-sale of assets. [Link: CDH Attorney’s]

Verdict:  A put/call option or deadlock clause could have saved the business and relationships.

The Johannesburg Tech Founders

Two partners planned early. When one exited due to illness, the insurance-backed buy-sell kicked in, value was agreed, and the business continued seamlessly. [Link: InsuranceNewsNet]

Verdict: Smart planning = minimal disruption.

Exit Planning Is Life Planning

A proper exit isn’t just a legal process, it’s a business strategy. These six tools turn uncertainty into clarity, ensuring that you control how you leave, not circumstance.

Whether you're scaling, selling, or just thinking ahead, now is the time to get these foundations in place.