I was interviewing an owner recently, and I had to pause and take a deep breath after he spoke those famous words, “but my accountant said they provide exit planning.” After my discussion he discovered their adviser really is not an exit planner—just a great accountant.
Beacon, America’s Exit Planner, was one of the pioneers of exit planning nearly a decade ago in this emerging profession. We have observed that while many advisers claim to be exit planners, they are really transactional advisers. So, allow me to shed some light from my experience as a retired business owner and certified exit planner.
I successfully “exited” as one of three owners of a two hundred employee specialty contracting business. I helped implement succession and sold to the fourth generation ownership team. Does that allow me to claim I understand a lot about exit planning? Yes. If scars, bruises and mistakes are a measurement, then I am an exit planner. I simply have authentic experience that allows me to understand the challenges facing an exiting owner.
My past company’s team of owners invested six years and more than $250,000 in the late 1990’s for fragmented advice and offerings as we wandered down the exit path with two offers from industry roll-ups that were consolidating our space and a national broker who brought investors and buyers to our company.
Frankly, this was a waste of time because the three owners were not on the same page with our goals and preoccupied with the day-to-day of our growing business.
Additionally, in the early 2000’s we investigated an employee stock ownership plan (ESOP) and eventually used a management buyout to transfer the stock of three owners to the fourth generation team of five senior managers.
Although I had an authentic experience in the trenches, I did not become an exit planner until I went through several years of training, certification and began implementing customized exit plans while navigating business owners to their desired result.
As an exit planner, I am trained as a process consultant to move an owner’s goal into a matching path that meets the owner’s financial target; to replace the owner; to protect his or her wealth; to reduce their taxes and risk with a comprehensive holistic result.
Through an extensive process we begin by establishing the owner’s goal while reviewing and analyzing scattered pieces of information to arrive with one document that coordinates all of the salient parts of the owner’s life to meet their desired outcome. This process can be compared to building a house with an architect’s design, whose blueprint coordinates all the subcontractors. The exit plan is analogous to the architect’s blueprint.
In a separate execution phase, the exit planner can implement the exit plan (like a construction manager) and take the role of a quarterback to coordinate different disciplines and professional advisers, including attorneys, accountants, estate planners, insurance advisers, financial planners, business consultants and others with the production to execute the exit plan.
In my own business exit, our team reactively explored each exit path with well-meaning professional advisers providing us fragmented information. There was no overall holistic directions that connected the isolated silos of information in a clear, concise, coordinated format. The inefficiencies cost our team and company additional time, disappointment and money.
Exit planning is the orchestrating of each of these disciplines coordinated in one comprehensive report. That report should illustrate many of the options available to the owner as a means of experiencing the transaction from a valuation and monetary standpoint while meeting the owner’s goals.
The report, like a blueprint, clearly navigates the owner’s path out of the business. This combined information will give you the best overall result once the exit is complete.