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Exit Planning: Pre-Exit Frequently Asked Questions.

Want to prepare your business for growth or exit in the next 2-10 years? Here are our answers to the top questions we get from business owners about the Pre-Exit stage of exit planning:

Exit Planning: Pre-Exit Frequently Asked Questions.
  1. "If I tell anyone I'm interested in 'exit planning,' won't that make competitors bolder and employees and partners nervous?" Not if you understand and communicate about exit planning accurately. It's crucial to remember that exit planning is simply good business strategy. It also prepares you for growth, because the same things that you do to prepare for a future exit, also help you prepare to grow. If someone says, “Hey I heard you're looking to sell the business, is that true?,” you could respond by saying, “It's always for sale! Want to buy it?” Then explain that you are always trying to make sure the business is ready to grow (which is true), and that not having a plan for the business beyond your own active involvement is one of the riskiest things you can do in business. And if you really want to have fun with it, you can throw a high inside fastball and ask if your competitors are looking to sell.

  2. "My clients are loyal because they know and trust me. How can I transfer that trust to a buyer so there's a business worth buying?" Transfer Trust in These Ways: A. Prototype your processes: break down everything you do into repeatable steps and train your team – whether in sales, operations, finance or elsewhere – to interact with your clients the same way you do. B. Show the client your “fingerprints” on the business: One of your team members might call your client and say something like, “Mr. Client, my boss and I were talking about your account, and he thinks that we should do [x]. What are your thoughts on this plan?” As the client builds trust with the rest of the team, let them see how the business you have designed is serving them. C. Over-communicate about the composition of your team: Introduce new team members early and reference them often, especially those who are directly serving the client. “So Ms. Client, I was reviewing your account with [Team Member], and she pointed out [improvement opportunity].” The more your clients see your team members contributing to their success, the faster trust is built.

  3. "I have several employees on my leadership team, but not all have the desire, understanding or capability to buy and run the business. How do I choose some and not others?" Know why someone is not ready. If it’s lack of desire, then it doesn’t matter if that person is your firstborn child: they shouldn’t run it. If it’s lack of understanding, lean hard into mentorship and training to see if they can build the understanding, and create metrics along the way to be able to evaluate progress. If it’s lack of capability, first identify whether this would be improved by increased understanding. But don’t assume that someone who has done a great job inside your company would do a great job running your company. This is the fallacy that Michael Gerber warns of in E-Myth Revisited. You run the risk of promoting someone past their skis, and when they crash, they harm the enterprise as well. You may need to explain to them why moving them into this position would do them a disservice. Finally, “fire bullets, then fire cannonballs.” This analogy from Jim Collins’ book Great By Choice reminds us to test ideas in conditions of minimal risk, minimal cost, and minimal distraction to the larger enterprise. So begin strategically delegating more leadership to your succession candidate(s), and see who has the desire, understanding, and capability to run it.

  4. "It's too soon to tell if any of my kids will want to (or be able to) succeed me in the company. But I want to phase out my role now. What do I do?" This is very common. A couple of our clients have recently transitioned leadership from the interim presidents to the rising generations. The key here is to find someone to bridge the gap who knows they are bridging the gap. You might be surprised how many seasoned executives outside your firm would love to run a successful company for a set period of time and then hand it off and retire. Word of caution: whether you hire this role from outside or promote from within, this person must be a cultural fit, and they must be able to delegate and work with a team. If you get a rugged individualist in this role, they will make the future transition to the next generation very difficult.

  5. "I'm already 'set' financially, with or without strategic exit planning. Why do I have to increase my value at exit?" Honestly, you don’t. If disease or stress is commandeering your life as you get close to exit, and if you’re all set financially, there is no rule that says you must harvest all the potential value. But try thinking of the lives you could change if you do increase your value at exit. Instead of paying stacks of taxes, what if you were able to redirect those dollars to the local charity that you and your spouse have been involved in for years? What if, by doing that, your family “accidentally” ended up with more money? If there is “too much money” on the other side of exit, you’re an adult: you can do wise things with it.


These are some of the most common pre-exit questions we get. Tomorrow, we’ll cover post-exit questions. If there is a question you think we missed, please let us know. See you tomorrow!




Any opinions are those of Timothy Weddle and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation.

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