When should a business owner begin Business Exit Planning?
From the date the owner incorporates or purchases his or her business! It is never too early. One of the main themes of the book is that most owners begin the exit planning process far too late. In fact, many just enter into negotiations without any real planning whatsoever. The earlier a business owner begins the planning process, the more consideration may be given to various exit options, the more he or she can shape his or her business in a manner that enhances value from an investor’s perspective, and the more effective tax planning is likely to be. Proper planning greatly increases the likelihood of success. This book is not only for those business owners who plan the sale of their businesses in the near future, but potentially for ANY business owners who wish to enhance the value of their organization.
What makes exit planning so difficult for business owners?
There are at least three areas of difficulty:
1. Exit planning in a business is a multi-disciplinary exercise. A business owner needs to combine so many different types of expertise such as legal, tax, accounting, financial, estate planning, wealth management, etc. Additionally, it is very difficult for the average business owner (who has never done a transaction) to put together the appropriate team, ask the right questions, and hold the team accountable. The book aims to provide a business owner with the step by step guide on how to successfully do this.
2. A business owner has many stakeholders to satisfy—they must often take into consideration the values and objectives of family, management, staff, co-shareholders and clients. Owners typically do not even realize they are caught among conflicting objectives and value systems. Only through careful planning can the interests of all stakeholders be taken into consideration and balanced.
3. In the same way that we often resist the need to write a will, so too, we tend to resist the idea of planning the succession of our business. It is never a pleasure to think of our own mortality, yet failure to write a will or plan succession can cause a huge amount of grief and hardship for our loved ones, staff, business partners, etc.
How might the book change a business owner’s way of thinking about his or her business?
The book has caused a paradigm shift in the way many business owners think about their companies. It talks about the need for a business owner to develop his business not only in his or her own image, but also from the perspective of what will create value for an investor. The book makes the case that the sale of a business is not a spontaneous process, but rather a process that requires months or years of painstaking preparation to best achieve the owner’s objectives. The book provides a framework for business owners to plan an exit.
What is the track record of owners trying to exit their businesses?
In a nutshell, very poor. Most companies put up for sale are not sold. Those that are sold, very often disappoint the expectations of owners. There are right ways to exit a business—taking into account all of the exit options, not just a sale—and there are many wrong ways to exit.
What makes this book different from other books on exit planning for businesses?
The vast majority of books on the subject are written for the benefit of professionals and advisors. This book is written from the perspective of the business owner—conveying sophisticated concepts in simple language, in only as much detail as necessary to understand the issues and manage the process.