What happens to your business when you retire, get sick, or decide to move on? Without a succession plan, your life's work could lose most of its value overnight. In 2026, with many baby-boomer business owners approaching retirement, planning your exit is more urgent than ever.
1. The Three Exit Options
| Option | Best For | Timeline |
|---|---|---|
| Sell to a third party | Maximum cash at exit | 2–3 years preparation |
| Pass to family | Legacy and continuity | 3–5 years transition |
| Management buyout | Key employees take over | 1–3 years |
2. Getting Your Financials "Sale Ready"
Buyers and successors need clean, reliable financials. Start preparing at least 2 years before your planned exit:
- Clean up your Xero file: Reconcile all accounts, clear old receivables, and categorise expenses correctly.
- Separate personal expenses: Remove owner perks (personal car, meals, travel) from the business P&L.
- Document "owner add-backs": Prepare a normalization schedule showing the true EBITDA.
- Reduce key-person risk: If the business depends entirely on you, start delegating and documenting processes.
- Build recurring revenue: Contracts, subscriptions, and retainers are worth more than one-off project income.
3. Tax Planning for Exit
The tax implications of selling a business can be massive — or minimal — depending on your planning:
- CGT small business concessions: Can reduce your capital gain to zero if you qualify (see our CGT concessions guide).
- Super contributions: Use the retirement exemption to contribute up to $500k into super tax-free.
- Timing: Settle the sale in a year where your other income is lower to minimise your marginal tax rate.
- Structure: Asset sale vs share sale have very different CGT outcomes — model both before deciding.
4. Family Succession Challenges
- Fairness vs equality: If only one child takes over the business, how do you fairly compensate the others?
- Capability assessment: Wanting to pass the business to family doesn't mean they're ready or willing to run it.
- Gradual transition: Start by delegating responsibilities, then ownership — not the other way around.
- Formal agreements: Even between family members, get shareholder agreements, employment contracts, and clear roles in writing.
5. Emergency Succession
What if you're suddenly unable to work due to illness, injury, or death? Every business owner should have:
- A Power of Attorney authorising someone to manage business affairs.
- Key person insurance to cover the financial impact of losing the business owner.
- A business continuity document that covers: bank access, software passwords, key client contacts, supplier arrangements, and staff management.
- An updated Will that addresses business assets specifically (not just personal assets).
Key Takeaways
- Start succession planning 2–3 years before your intended exit.
- Clean up your financials and document owner add-backs for accurate valuation.
- Use CGT small business concessions and super contributions to minimise exit tax.
- Family succession requires formal agreements and gradual capability building.
- Have emergency succession documents in place — Power of Attorney, insurance, and a continuity plan.