Over the past few weeks, we've established a few crucial facts about Exit Planning.
Fact: Transferable value is what a company is worth to a buyer without the seller’s involvement.
Fact: An Exit Planning Advisor must help business-owning clients build transferable value in their companies regardless of their chosen Exit Path.
Fact: We call the attributes of transferable value that buyers require Value Drivers.
Fact: A next-level management team is the most important Value Driver because that team implements all of the other Value Drivers.
We’ve made the case for all the statements above in the prior two articles, "Transferable Value: The Most Important Element of a Successful Exit," and "How Next-Level Management Builds Transferable Value." But we pause today to address the concerns of advisors who ask, “I’m not a consultant so I can’t recommend the appropriate management-building strategies or the best operating systems. What am I supposed to do?”
We're so glad you asked.
Most of BEI’s Licensed Members aren't business consultants. Yet, they all understand their key role in building value in their business-owning clients’ companies.
Role 1: Exit Planning Advisors teach owners the absolute necessity of building transferable business value. Without sufficient and transferable value, successful exits are impossible. They motivate owners to act.
Role 2: Exit Planning Advisors educate owners about the value of next-level management both to their companies while they still own them and to their eventual buyers.
We do not claim that Exit Planning Advisors must be skilled in identifying the best managers, hiring them, creating job descriptions, and motivating and compensating them. Some Exit Planning Advisors have those skills, but most do not, and that's OK. What experienced Exit Planners do have are carefully vetted stables of experts whom they bring in on an as-needed basis.
In the prior article on next-level management, we met Ken A. Stiefler, CExP, an Exit Planning Advisor. When his client needed next-level management, he knew what to do. He introduced his client to business consultants who focused their practices on evaluating and coaching management teams. Over a multi-month period, the those consultants helped the owner hire new management and provided coaching to existing management. As a result, the owner could step back from the business while improving his company’s top and bottom lines.
Advisors Are Not Alone
In addition to the networking opportunities that BEI provides its Licensed Members to meet and vet professionals in other disciplines, our Exit Planning Software (EPIC) provides a host of Recommendations that guide advisors through the most common types of management-team-building activities. For example, one Recommendation might be: “Work with a consultant who is trained and experienced in using The Culture Index Program.”
At BEI, we’ve used this program to match applicants’ personalities to the tasks required in all sorts of positions, but there are several other programs that owners can use to help make certain that the right people are in the right seats. It's not an Exit Planning Advisor's job to know whether or how the management team or other Value Drivers need strengthening. It is, however, the Exit Planner’s job to ask the questions owners need to answer to assess the strength of each Value Driver, especially the capability of existing management to build transferable value at the pace necessary to achieve the owner’s Exit Goals.
Owners will likely not know which consultants to turn to, nor (usually) will their other advisors. Therefore, when appropriate, it is essential for Exit Planning Advisors to introduce owners to consultants who can guide them through the value-building process.
In our next article, we will describe the second Value Driver—installing and strengthening the operating systems that make a business successful. Again, Exit Planners are not all experts in various operating systems, but they have taken the time and made the effort to interview and assess the professionals in their communities who are.
It's the Exit Planner's job to provide access to reputable experts and motivate owners to act.