When we talk to business owners about the value of exit planning, we are talking about orchestrating a business exit that fulfills their unique personal and financial goals. More often than not, the business is the only asset with the potential to deliver results the owner wants and needs.
Since tackling a task of this magnitude can be daunting, owners sometimes ask whether devoting the necessary time and money to this project is really worthwhile. Our work in the exit planning arena has taught us a few things.
Watch Your Emphasis
Good exit planning can be the difference between a successful ownership transition and a complete derailment of the departure, as well as all the owner’s goals.
Exit planning is not, as others might have you believe, simply a thoughtful sale of a business. It is much more. As a business owner, your emphasis should be on the planning, which will in turn support the exit. Planning is the key concept.
It all starts with understanding your own objectives. When an owner sets her objectives in an exit planning context, she does so methodically and proactively. Owners who wait until entering the business sale process to decide how much cash they want and need from their companies, do so reactively. Often, they make hasty decisions or are blinded by attractive bait held out by less-than-scrupulous buyers.
Early in an organized and systematic exit planning process, owners place a realistic value on the company. If an owner has one foot out the door or suffers from the fatigue of ownership, finding out the company is not worth what she had hoped is a painful experience. Even more painful is the subsequent rededication of effort to building the value of the company.
What’s even more powerful than setting objectives and understanding company value, however, is the
emphasis exit planning places on building and protecting business value. Without a doubt, this is the element of exit planning that gives an owner the biggest bang for the buck.
Owners often don’t realize that focused attention on building value is an essential part of the exit. If I’m leaving, why would I build value?, you might think. Keep in mind that exit planning includes a heavy emphasis on planning and the result is a more successful exit.
Let’s Be Specific
Take a look at just one of the many ways exit planning shifts the emphasis to planning for the benefit of the exit. A technique we use to motivate managers to remain with a company long-term and after a sale is the “stay bonus.”
An effective stay bonus:
Group Planning Indoor Skydiving Facility On Eastwood Announces Updates
Staff Reports - Mar 21, 2023
Possible Writers Strike Could Be Felt In Wilmington Film Scene
Jenny Callison - Mar 20, 2023
Former County Commissioner Woody White Appointed To UNC System Board
Jenny Callison - Mar 22, 2023
City Takes Next Steps Toward Possible Purchase Of Thermo Fisher Building
Staff Reports - Mar 22, 2023
Oklahoma Onion Burgers Planned For The Pointe
Miriah Hamrick - Mar 22, 2023
Areas throughout southern Brunswick County are seeing an increase in residents and development, leaving municipalities looking at how to pla...
Book and media recommendations from Info Junkie Hoop Morgan, founder of The Forte Institute....
Brunswick County property owners have received their new tax values as a result of this year’s required revaluation process....
The 2023 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.