How Setting Exit Goals Leads to Successful Engagements

Submitted by John Brown on Fri, 02/01/2019 - 9:00am
Two men hiking, one man grabbing the other man’s arm for support.

When a man does not know which harbor he is heading for, no wind is the right wind. –Seneca

Have you ever wondered how so many advisors make recommendations to owners about their business exits without understanding the exit goals that the owners hope to achieve? We have, because it happens every day. Advisors will recommend a product or a service they provide without ever pausing to ask an owner, “What do you want your exit to achieve?”

In this post, we’ll look at how an owner’s goals provide the framework for everything Exit Planning Advisors do.

Exit Goals Provide the Framework and Rationale

Let’s look at a typical example of how an owner’s exit goals drive an advisor’s recommendations.

An advisor named Sue has a longtime client who tells her that he’d like to leave his business in “about five years,” the most commonly expressed date. Sue knows how important it is to translate that “fuzzy date” into a specific, actionable date. Doing so allows her client to revise his desired departure date on his terms, such as “I want to exit on June 1, 2023.” (We’ll discuss this topic in further detail in a future post.)

As Sue considers how likely it is that her client’s company will be ready for him to exit on that date, she realizes that her client’s business value must grow if he’s to continue living his current lifestyle after he exits. She knows from experience that owners don’t tend to cut expenses after they leave their companies: They travel and engage in hobbies (usually expensive ones) that they had no time for while working. She also knows that growing business value is normally a task for a management team and that buyers value companies that can run without their former owners at the helm. With all that running through her head, the one question she poses to her client is, “In light of your need to build business value, how can we motivate and incentivize your management team to do that?”

There are many approaches, designs, tools, and products that you can consider. For example, because Sue’s client has set a specific exit goal—in this case, his departure date—the success of all planning designs and tools that she might use to motivate management will be measured by how well management achieves the necessary growth prior to his exit on June 1, 2023. In sum, setting clear goals guides an Exit Planning Advisor’s recommendations and future representation.

Let’s look at another example of how setting exit goals precedes action.

An owner, Brian, meets with Sue to discuss a letter of intent (LOI) he’s received from a buyer to purchase his business. The LOI describes the purchase price and other general terms of purchase. How should Sue respond?

If Sue were an attorney specializing in mergers and acquisitions, she might dive into the terms. Similarly, if Sue were a financial planner, she might begin with a discussion of how to best invest the net proceeds.

But because Sue wants to help Brian make the best decision for himself, shouldn’t she first ask him what he wants the sale to accomplish? The only way for her to determine that is to ask him to articulate his goals for himself, his family, and possibly his community and employees. Only then would it make sense to help him determine whether the sale of the business as outlined in the LOI accomplishes his goals.

Representing business owners in the transfer of their ownership should not begin with a discussion of the terms of an offer or investment portfolio alternatives for the post-exit proceeds. Most advisors unknowingly put the cart (the sale of the business, advice concerning investments, etc.) before the horse (the owner’s goals). Doing so makes their advice appear self-serving and may actually harm owners’ ability to exit on their terms.

Contrast that with advisors who first help owners understand and quantify all of their goals, thus laying the groundwork for successful exits. When advisors help business owners lay this groundwork, the standard of success is how well the exit achieves all of the owner’s goals and aspirations. This goes beyond using the successful negotiation of every purchase term or projected performance of the portfolio as the standard of success, giving owners a more encompassing standard of Exit Planning success and advisors short- and long-term chances to work with owners.

Goals Without Resources Are Pipe Dreams

Goals by themselves are worthless without also knowing the resources available and the resources needed to accomplish them. This is why establishing goals and determining resources are the first two Steps of The BEI Seven Step Exit Planning Process. Before advisors make any recommendations or act on those recommendations for owners and their businesses, they must help owners set goals and compare what they have to what they need to accomplish those goals.


  • Owner-centric planning begins with understanding and quantifying all of the owner’s goals and aspirations.
  • Recommending that owners accept an offer to purchase their companies, purchase specific products, or pursue a certain strategy before ascertaining an owner’s goals and resources is premature and will likely be seen as self-serving.
  • If advisors don’t know what owners want and need their business exits to achieve, how can they possibly know whether they have succeeded as advisors?

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