Most people go into business not only to earn an annual income but, more importantly, to ultimately extract the wealth created with a lump sum to fund their retirement or next venture. But many don’t think about how to exit their business until it’s nearly time to retire. Worse, many find they are forced to sell or leave their business suddenly due to illness, disability, debt, bankruptcy, legal disputes, or divorce.

You can’t just put up a ‘for sale’ price on your business and expect that someone will come along and pay you the price you want. And if you decide to put an advertisement in the paper or online, don’t think that the price you get represents the true value of your business.
For business owners, the business may be the largest asset with the family home coming second. Yet many business owners will spend more time and effort preparing the family home for sale than their business.

Most of us wouldn’t just do a quick tidy up two weeks before the auction of our home and hope for the best. Selling a business, just like starting a business, requires a strategic plan, whether you plan to sell to family, employees, or complete strangers. Otherwise, you risk losing the long-term value of the investment that you have worked hard to create.

Understanding the three key factors of Business Succession and Exit Planning is critical to developing a successful plan. The co-ordination and preparation of the three factors is what ultimately leads to a successful exit.

The Business - Most businesses are not exit or sale ready, they are owner dependent and often lack effective systems and processes. Even though some of them can be quite large, they, may still be run like small businesses.

The Owner/s - Most baby boomer business owners are very strongly “attached” to their business. They identify with the business in what is called role-identity fusion. They need time and space to get comfortable about what their exit looks like and importantly, what life after the business means.

The Money - The business, the owner/s and their finances are often complicated and interwoven and therefore hard to separate. The Exit Planning Institute estimates that up to 90% of an owner’s wealth is tied up in and linked to the business. This this needs to be resolved before an exit can take place, and to ensure the owner and their family are adequately funded for retirement.

A strategic succession plan is a vision of the future, broken into the steps you need to take to achieve that vision. To maximize the value of your business on exit, you must plan your exit long before it happens. This will allow you time for a smooth transition, but it will also give you much better security should anything unexpected happen to you, the other shareholders, or your family members.

Business Succession Planning is a holistic process designed to help you align your personal and financial goals with your business performance and value. We help you to identify the current position and value of your business; the price you need for your business sale to meet your personal objectives and then develop a strategy to help you bridge the gap.

The process from planning to exit may need three to five years. Our aim is to have your business adequately prepared and at peak performance to ensure you get the best return. If you are passing the business on to family members, we help you put processes in place to make sure the business doesn’t crumble the minute you hang up your keys. We will explain to you that WHO buys your business is a key factor in the price that you achieve and help you to position your business so that you can attract the best buyer.

The most successful business succession plans are those that have been carefully and slowly considered over a period, are implemented gradually, constantly monitored and reviewed, have realistic strategic outcomes, and “Begin with the end in mind”.

The 21- Step Process
We use and recommend a five-stage process, each stage focused around identifying, protecting, maximizing, extracting, and managing business value. Each of these stages have several key steps, 21 in all, designed to effectively prepare the business, the owner and the financial position to maximize business value and achieve a successful exit.

This process has been developed over time. When the process was developed in 2006, the process had only 9 steps mainly focused on preparing the business. However, as we worked with clients and learned more about their needs and the issues that were impeding them from becoming successful, the process was further developed into 11, then 15, and finally 21 steps. The process now covers all the key issues: business, personal, and financial, to ensure maximum success.

The process allows time and space for owners to become very clear about what Business Succession and Exit Planning means to them. For many, it is not about the money - more about preserving their legacy, looking after staff, customers, and suppliers. As such, the process needs to identify the key drivers and aspirations of the founders and secondly, provide a mechanism for them to be successful in achieving those key goals and outcomes.

To fully implement the 21 steps, we typically work with clients over a 12-to-18-month period (and with some clients significantly longer) and we always work closely with the clients’ key advisers - accountants, financial planners, lawyers, bankers, and the like. This will help speed up the process and ensure the best possible result. This is very much a trusted adviser relationship model, and we work closely with the owners, family members, key employees, and other stakeholders to balance interests and ensure all business succession and exit planning needs are met.

We use our 21-step process to exit your business over five stages with all clients:
• Stage One: Identify Value
• Stage Two: Protect Value
• Stage Three: Maximize Value
• Stage Four: Extract Value
• Stage Five: Manage Value

Where Do You Start? The Business Insights Report ...

The Business Insights Report is a comprehensive 50+ page analysis of your business, including financial evaluation, identification of risks, exit readiness, and future value potential. Essentially, the report includes an implementation plan, which charts the pathway for you and your advisory team to close the gaps in accelerating your business growth or creating an exit ready enterprise.