Exit Planning Strategy: Using an Owner’s Goals to Start Planning

Submitted by John Brown on Fri, 06/21/2019 - 10:30am
A woman climbing a steep rockface using an orange rope and climbing gear, with a large waterfall to her right.

Successful small and mid-sized businesses usually share a few common elements. First, they’re headed by owners who shoulder most of the important burdens. Second, they must grow beyond what the current owner can provide. Third, when owners realize that they must change their already-successful businesses to make them even better, they either hesitate for various reasons or rush to action.

In this series of articles, we’ll look at owners like Linda McCurdy who are eager to change their businesses so that they can exit them on their terms; how advisors can help owners determine what they need and how to get there before a sale; and why owners and advisors should start the Exit Planning Process well before the intended business sale.

Linda sat down with Glenn, her financial advisor; and Emmy, an Exit Planning Advisor.

“I think it’s time for me to think about getting out,” Linda told them. “I want to spend more time with my grandchildren and charity work. I’ve gotten offers to sell the business before, but I have no interest in selling to an outsider. This business and its success came through my family, and I intend to keep it that way.”

“It sounds like you’ve got your Exit Path figured out,” Emmy said. “Do you know whether selling your business to your family will provide you with the money you need to never have to work again?”

“I don’t,” Linda said, “but my financial advisor Glenn might have a better idea about that.”

Glenn explained that most owners want to maintain their lifestyles after they exit. He told Emmy that they would need to know how much money she needed to maintain her current lifestyle. She already had $3 million stocked up in investments.

“I got an offer for my business a few years ago for $5 million,” Linda said. “After taxes, I think that’s about $4 million net. So, I think I’m pretty close to where I need to be.”

“It’s possible you are,” Emmy said. “It depends on when you’d like to transfer your ownership. When are you looking to exit?”

“Five years from next week,” Linda said. “On my 70th birthday. But I’m willing to wait as long as I must to transfer it to my kids.”

Emmy now had much of the information she needed to begin the Exit Planning Process. She knew Linda wanted to maintain her lifestyle. She knew whom Linda wanted to transfer the business to. She had an exit date. Now she needed to figure out how to make it all work within an insider transfer.

Turning Ambiguous Goals Into Real Action

Exit Planning is an owner-centric process. This means that Exit Planning Advisors always work for the owner’s primary interest. Once Exit Planning Advisors have outlined the owner’s goals, they can begin making recommendations for how to achieve those goals. But everything starts by figuring out what owners must have to assure their financial security.

In Linda McCurdy’s case, her Exit Planning Advisor confirmed Linda’s exit date and Exit Path. Her financial advisor confirmed that she had $3 million in investments and wanted to maintain her lifestyle. There were several more pieces of information that everyone needed before they could start planning. A big piece was determining what the business was worth.

“Linda, have you ever gotten a professional business valuation?” Emmy asked.

 “No,” Linda replied, “but I thought that the $5 million offer I got a few years ago would give me a decent idea for what it’s worth.”

“I understand where you’re coming from, but I can’t leave your financial security in any doubt,” Emmy said. “You’ve worked too hard to risk everything you’ve built on what one buyer was willing to pay.”

“I hadn’t thought about it like that, but you’re right,” Linda said. “What can I do?”

"I’d like to introduce you to a valuation specialist," Emmy said. "He’ll help us decide what we need to do to assure you’re financially safe after you exit. He’ll also help us figure out which kind of valuation you need right now, along with the cost.”

While some owners might question the need for something like a valuation, they’re less likely to resist when advisors can appeal to their desire to achieve and maintain financial security. When owners resist a valuation, it’s typically a matter of cost.

Linda didn’t want to risk her financial security after her exit just to save a little money right now. Emmy leveraged that to help Linda get the information she needed but didn’t know how to get.

In next week’s article, we’ll look at how Linda’s desired Exit Path—transferring to children—affected how she and advisors would approach Exit Planning.


  • Exit Planning Advisors take their time to work with owners to accurately determine their wants and needs.
  • Obtaining accurate determinations of value and need lets owners begin their planning on a solid foundation, rather than on a bed of quicksand.
  • Emmy knows what Linda’s goals are. Now she must quantify her goals and what she currently has to achieve them.

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