Exit Strategy and Succession Planning

The time will come when you want to move on from your business.  But the time to start planning that move is when you start the business, not three months before you want to leave.

Why is that, you might ask.  The answer comes from real world experience.  The US Department of Commerce says that, of business listed for sale with brokers, only 25% actually sell.  The remainder never sell.  Nothing is realized on exit.  The owner in these vast number of cases had a job, not a business.

Exit strategies vary:

  • Sale of business
  • Going public
  • Passing on the business to the next generation
  • Donating the business to beneficial cause

An owner’s strategy can change through the life cycle of the business, but having a plan can focus an owner’s attention on the reality that someday he or she would like to realize the value of years of hard work and many sleepless night.  Failure to plan in this regard is just planning to fail.

In each case, the goal is to maximize the value of the business as an ongoing enterprise, but getting there will dictate different approaches to building the business.  If selling is an owner’s goal, for instance, then likely types of buyers should be identified, such as competitors, vendors, customers, employees, or even a buyer new to the field.   Going public, on the other hand, requires that the business be attractive to third-party investors. Passing on to the next generation requires identification of the likely leader and training in all aspects of running a business.  And donating the business to charity has its own challenges.

We help an owner

  1. Develop the strategy, and
  2. Work toward realizing the goal.