Nora Chapman's story was typical of most business owners. At age 54, she was ready to leave her 25-employee advertising business. Her first thought was a sale to key employees, so when we met, her first question was, "Is this the right exit choice?"
Many find themselves in the same situation, thinking of a time beyond business ownership. But they don't have a clear vision of how to leave the business in style.
First, understand that leaving your company is a process. Ask yourself whether you are approaching that exit in a methodical, logical, rational manner. Most owners do not undertake the necessary thought and planning that underpins a good ownership transition because they don't know how to begin or what factors to consider.
It begins with an honest understanding of the owner's exit objectives and value of the business. Based upon what that owner has and wants the process can determine a proper path, be it a sale to a co-owner, to a third party, a transfer to children, or an orderly liquidation.
As part of this process, you must consider what would happen to the business and to your family in the event that death or disability precedes your planned exit.
But simply knowing a process is not enough. Success follows a written plan that sets out exit objectives with financial factors and documents how to achieve those objectives.
That plan includes a checklist assigning to each advisor responsibility to complete a task, and within a set time.
No business owner has the skills to create and execute an exit plan without help. Those who try tend to leave a lot on the table: money, time, even happiness.
Successful exit planning is a multi-disciplinary effort that requires you and your advisors attorney, accountant, financial, insurance work together. And at some point, the seller might also tap a business broker or investment banker.
Start planning now, because when the economy shows signs of recovery, many business owners who decided to postpone a sale until the recession ends will find themselves in competition with the rush of retirement-aged baby boomers clamoring for the exits. And selling a company in the resultant buyer's market is no less desirable than selling during a recession.
Mark Smith is a business exit planning specialist and a member of Business Enterprise Institute, Inc. a premier provider of exit planning information for business owner advisors. He can be contacted at
673-6724 or mark.smith@summitbusinessadvisors.com.
