Exit Planning Goals: a Two-Pronged Approach

Too often business owners do not begin exit planning far in advance of when they expect to transition their businesses. These owners miss out on the two-pronged approach to exit planning that can be helpful in multiple ways. When given enough time to work with clients, exit planning advisors can help them meet general exit planning goals as well as their owner specific ones.

General Exit Planning Goals

The most important goal that any owner will have for exit planning is to successfully exit his business, extracting enough value from it to finance his future lifestyle or career goals. Exit planning advisors do not consider any business exit or transition to be successful unless the owner exits with financial security. As a result, much of their efforts will be focused on getting a business in good enough shape that it will generate interest and good offers.

Additional, Owner Specific Goals

Beyond the above general goal, business owners will have their own goals. One owner’s goal may be exiting the business when he wants to, sooner rather than later or on a specific timetable. For some owners, having to remain with the company during a transition or under the leadership of his successor would be undesirable. Another owner might have a goal to transfer ownership to a specific person or group of people or to a buyer who has the same values and vision for the company.

The above are examples of the second prong in the two-pronged approach good exit planners will have for their clients. A good exit planner will work hard with his clients to ensure they can leave on their own terms and not whatever terms outsiders to the business or the exit planner himself think are best. In order to do that, the exit planner needs to know what his clients’ hopes and goals for his business are. He needs to get to know both the owner and the business to understand what the goals are and what work needs to be done to achieve them. In an earlier blog we discussed value drivers and how to identify them for a specific company. Once these value drivers are installed, benchmarking of progress towards the specific goals they represent can begin.

Different Exit Paths

Exit Planning is about choosing goals and then creating paths to reach those goals. In most cases there will be more than one way to reach the owner’s specific goals as well as the general goal of exiting with enough financial security. It’s the exit planning advisor’s job to describe and compare different exit paths so that the owner knows all of his options. The exit advisor is a guide. He has general experience of the landscape ahead. The owner depends on him to make recommendations about how to avoid pitfalls in that landscape. It is not the advisor’s role to decide the path, however. Neither can he guarantee that the owner will take his advice. He can only do his best to understand the owner and the company and make recommendations based on the owner’s goals, and external factors like the economic forecast.

Once the owner has decided to pursue an exit path, the exit planning advisor will work with him to implement strategies that will help him realize his goals. Over the course of several years – ideally 5 to 10 years – with hard work and the help of other legal and financial experts, the company will become stronger and more profitable and the owner will be able to exit on his own terms with his future financial security ensured.

If you’d like to discuss the two-pronged approach to exit planning or would like to know more about the process, please contact Prometis Partners today. We would love to talk with you and discuss your exit readiness in detail.

Vincent Mastrovito

Vincent Mastrovito

[email protected]
(616) 622-3070
250 Monroe Ave. NW, Suite 400 
Grand Rapids, MI, 49503

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