Recently, we talked about how having an Exit Planning process is the most important component of successful Exit Plans. That’s because the process itself—from the first meeting, to data collection, all the way through implementation—serves as a road map to guide owners and their advisors, keeping everyone informed, engaged, and accountable. But perhaps one of the most unique aspects of the BEI Exit Planning Process is how it remains nimble and flexible to each business owner’s wants and needs, rather than simply producing a predetermined outcome.
Flexibility Combats Assumptions
When business owners first begin to consider planning for their business exits, they tend to have a specific Exit Path in mind. For example, 59% of business owners initially intend to sell their businesses to a third party as their Exit Path. For many advisors who don’t have a process, there’s an innate temptation to follow through on what the business owner states he or she wants at the outset, no matter what.
The problem with aiming to follow preset Exit Paths is that as business owners prepare for their business exits, they often uncover other goals that they’d like to achieve, goals that sometimes stand at odds with their pre-picked Exit Path.
There have been business owners who have wanted to sell to a third party, only to find that the third party intended to shut down local operations and lay off all but a handful of employees. There have been owners who have dreamed about transferring their businesses to their children, only to find that their children cannot work well in the business together. There have been business owners who have tried to transfer ownership to key employees, only to find that those employees plan to radically change the company’s culture and values while keeping the original owner’s name on it.
In short, prechosen Exit Paths can produce unwanted outcomes. But an Exit Planning process can prevent these unwanted outcomes.
What BEI's Process Does
One of the strengths of the BEI Exit Planning Process is that it does not set a predetermined Exit Path for business owners, nor does it take assumptions at face value. Instead, it requires advisors to learn about the business owner’s situation, including the owner’s hopes and dreams for the company, concerns about family and post-exit lifestyles, and what it will take for the owner to consider the business exit successful. Exit Planning Advisors can clarify the owner’s true goals and priorities, rather than speaking only to goals that are currently top of mind, by talking with the business owner and their own Advisor Teams. This helps business owners and advisors prioritize goals and objectives in ways that truly let owners exit their businesses on their terms.
A common misconception that the BEI Exit Planning Process helps owners and advisors overcome is the idea that Exit Plans must be set in stone early on. While it’s true that writing Exit Plans down is crucial to their success, it does not mean that written Exit Plans cannot evolve. In fact, in many Exit Planning projects, owners and advisors find that the Exit Plan they end up with is vastly different than the Plan they anticipated during their first conversation. Most importantly, that evolved Plan is always better than the original idea, because it uses data, owner and advisor input, and specific tools that help advisors create plans that achieve the business owner’s goals.
By adhering to a process to discover the best Exit Path for business owners—rather than adhering to an Exit Path and trying to find ways to make that Exit Path work—business owners and their advisors prevent themselves from jumping to conclusions and damaging the future for the owner and the company. The Exit Planning Process helps owners and advisors keep their options open as they determine the best course of action for a successful exit.