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:
Holly Childs Resigns As WDI Head
Vicky Janowski
-
May 26, 2022
|
|
Aswani Volety Named New UNCW Chancellor
Johanna Cano and Johanna Still
-
May 26, 2022
|
|
Wilmington-based Realty Group Announces Changes
Cece Nunn
-
May 27, 2022
|
|
Firm To Convert Offices To Warehouse Space After $6M Purchase
Cece Nunn
-
May 27, 2022
|
|
WilmingtonBiz Talk Previewing Summer Tourism Season
Vicky Janowski
-
May 26, 2022
|
The Cucalorus Festival has covered a lot of ground over the past 28 years, and with executive director Dan Brawley at the helm, it continues...
Innovation helps set a startup apart from the competition, said Heather McWhorter, regional director of the UNCW Small Business & Technology...
A staple in the community for about three decades, the Wilmington custom woodworking shop also features a retail component – a unique featur...
The 2022 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.