What Does an Exit Planning Team Do?
Exit Planning is a new discipline, developed to meet a massive and growing market need. Unfortunately, like any new service offering, there are a lot of people who use the term without fully understanding it, or in hopes that it will associate them with a growing field of professional practice.
In order to build a Comprehensive Exit Plan, you need a team of professionals working together whose primary goal is focused on your exit objectives. Those objectives should consider how you see your life in retirement and the future of the company once you are no longer running it.
So, how does it work?
The Analogy: What Exit Planners Do
Let’s start off with a quick analogy. Assume, for example, that you run a warehouse with delivery services. You decide you want to try and make it as efficient as possible.
• You tell the purchasing manager to only order product when pricing and inbound freight are the least expensive.
• You tell the warehouse manager to develop a system for picking orders with methods that require the least amount of labor.
• You tell the shipping department to pack up orders using the least possible amount of material.
• You tell the dispatcher to plan routes for times with the least traffic and the lowest fuel use.
• You tell the sales department to promise the customer anything that will close the sale.
Now, without letting any of these people talk to each other, you announce that tomorrow you are implementing all their results simultaneously. You go home dreaming about how amazingly profitable your business is about to become.
You don’t have to be a distribution expert to know what is going to happen. The uncoordinated plans are going to explode when combined. You’ve just come up with a great way to go out of business.
Instead, what if you told one manager that your overall goal is to sell more product and give excellent service, so customers would become loyal buyers and the company will increase revenues and profits? Then you had the other managers report to him, so that all of their plans would compliment the overall objective.
That’s what an exit planner does.
The Professional Exit Planners
Exit planning is the process of developing a business owner’s strategy for what may be the biggest financial transaction of his or her life…the transfer of the business. That strategy may be a succession to the next generation of family. It could be a sale to employees. It may be a sale to another entrepreneur, or acquisition by a larger company. In some cases, it could require an orderly dissolution.
In every case, it involves tax, legal, financial, operational and risk management expertise. No one practitioner has all the knowledge required for every aspect of the plan. Exit planning, in the true sense of the word, is coordinating all those skills so that they work together for a single objective.
The Members of the Exit Planning Team:
You will need the help of several professionals each with their own expertise in order to build a Comprehensive Exit Plan. While true that they each offer other services, these are the ones that impact an exit planning engagement.
Accountants help clients structure their business and personal holdings to minimize the bite of the IRS.
Estate Attorneys protect assets and document transfers of inheritances.
Wealth Managers provide retirement projections and validate lifestyle assumptions.
Consultants/Coaches recommend ways to increase the value of the business, to maximize the proceeds from a sale.
Business Brokers value and list a company for acquisition.
Insurance Brokers write policies to protect owners, their families and their companies against premature departures,
or the absence of key employees.
No one professional can provide all the pieces that need to work together for a successful exit plan. They might be able to provide insight on more than one but ultimately they will need the help of other Advisors and of those Advisors, you will need to choose one to lead the way through the process.
Even if you are just starting to consider an exit plan, Take our Free Assessment so you can get ahead of the game. It will provide a great road-map for you to share with the members of your Advisory Team.
The ExitMap® Assessment for Business Owners
The First Step to Understanding the Complexities of Preparing a Company for Transition
The ExitMap® Assessment questionnaire consists of 22 questions and produces a high quality 12-page summary report which will be emailed to you. The report ranks the overall preparedness of a company for transition and provides a breakdown of the four major categories of readiness; Finance, Planning, Profit/Revenue and Operations. If you are a business owner just starting to think about exit planning or if you just want to know where you and your company stand, this is your first step.