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Uncovering Exit Planning Assumptions Before It’s Too Late

Submitted by John Brown on Fri, 07/05/2019 - 8:00am
A brown sign reading “Unstable Cliffs, Stay Back, No Public Access” in front of an ocean view.

Over the past articles, we’ve watched Linda McCurdy do two important things to plan her business exit. First, she and her Exit Planning Advisor established her goals. Then, they began examining her assumptions about her chosen Exit Path, her resources, and her potential successors. Today, we’ll look at how Linda and her advisors uncovered and began to address her assumptions before it was too late.

We pick up the story from there.

After two weeks, Linda and her Exit Planning Advisor, Emmy, reconvened to discuss what Emmy’s Advisor Team had found out about Linda’s business. First, they discussed what Linda’s financial advisor, Glenn, had discovered about Linda’s financial needs.

“Linda, according to Glenn, you have $3 million saved up in investments,” Emmy said. “Based on Glenn’s financial needs analysis, you’ll need $8 million to maintain your current lifestyle after you exit.”

“So, I’m $5 million short?” Linda asked.

“Not quite,” Emmy said. “I also talked to Morgan, my business valuation advisor, and she’s got some good news. As of right now, your business is worth $4 million and a sale would net you about $3 million. So, your gap is currently about $2 million.”

“That sounds a lot more manageable,” Linda replied. “What can I do next?”

So Close Yet So Far

Knowing the gap between the resources owners have and the resources they need to achieve post-exit financial security is the jumping off point for successful Exit Planning. For some owners, the gap can be monumental. For others like Linda, the gap can be sizable but surmountable. Once owners know what the gap looks like, they want to do everything they can to close it. And they are ready to start now.

This is why knowing the Asset Gap is such a huge piece of leverage for owners and advisors: It encourages owners to do something. Instead of simply wondering what it might take to exit successfully, owners can act to achieve a successful exit. But they can only do that if they know their gap. They can only know their gap with help from their advisors.

Linda was so close to achieving financial security, but as we’ll see, she was still pretty far from where she wanted to be.

“You’re right that a $2 million gap is manageable,” Emmy said. “But we have a few things to consider, especially if you’re committed to transferring the business to your boys.”

“Nothing is more important to me,” Linda said.

“In that case, we have some work to do,” Emmy said. “My business consultant, Joelle, came back with some less-than-thrilling news.”

“What’s that?” Linda asked.

“According to Joelle, your sister Gail is eager for ownership. But your son Gene confided that the reason he’s stayed with the business so long was to make you happy. He said he’d much rather do something else than run the business.”

Linda seemed stunned before blurting out, “I had no idea. I guess that changes things.”

“It does, but the great thing is that we have plenty of time before you plan on exiting. Let’s schedule a meeting for next week to give you time to reflect on what directions you’d like to consider.”

Exit Planning often uncovers surprises, both good and bad. The key is that through Exit Planning, owners and advisors can anticipate how to address surprises in their initial plans. Next week, we’ll tie everything together and see how Linda acted on this new information.


  • Even with the best intentions, owners can make assumptions that may negatively affect their Exit Plans. Advisors must help them uncover those assumptions.
  • Advisor Teams that include specific professionals for specific problems are best suited to create Exit Plans. Exit Planning Advisors cannot (and should not) try to do everything alone.
  • Knowing an owner’s goals and resources is the jumping off point for successful Exit Planning.

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