Eliminating Exit Planning Deal Killers

Fri, 09/16/2022 - 08:00

Written by: mernzen

Last week’s blog covered common business owner “villains,” described as those misperceptions that owners have about the importance of Exit Planning. These villains take shape in many ways, internal and external, ultimately hindering an advisor’s ability to move forward with an Exit Planning engagement.

Similarly, there are misconceptions that carry weight after the initial conversation when an owner has decided on a third-party sale and is looking to begin the sale process. BEI Founder John Brown coined the term, “Deal Killers,” to describe those conditions and beliefs that, if undetected and unresolved before the sale to a third party begins, will kill a deal.

Unless you’ve jumped into the Exit Planning Process with a business owner, it makes little sense to jump into the business sale process.  The opportunity for the greatest influence on maximizing sale proceeds occurs before taking a business to market. 

After all, the most significant factor that impacts a business owner’s ability to leave their company is creating a company with transferable business value. While working to increase business value, it is wise for the business owner to work towards eliminating or limiting the Deal Killers before the sale process begins.  

Describing the Deal Killers  

Many owners are plagued with Deal Killers because they have not started the Exit Planning Process. As review, the Exit Planning Process through the lens of what would hinder a deal, includes:

  • An accurate understanding of goals and aspirations post-exit
  • Objectively determining the value of the business and other associated assets
  • Determining the size of the gap between existing resources and those needed to achieve financial independence

There are several Deal Killers that, once the business sale process begins, live up to their name. The following can and will destroy a business owner’s ability to sell their company:

1. The belief that the business owner can sell their business today for enough money to satisfy their financial independence needs and wants.

2. The failure to reconcile their need for value with the market’s perspective of value before going to market.

3. An exclusive focus on top-line sale price.

It is likely that unless there has been significant work to increase transferable business value, the owner will not get what they need or want to maintain the post-exit lifestyle they desire. As is true for the above three Deal Killers, the Exit Planning Advisor is equipped with the necessary resources to assist with finding qualified transaction intermediaries who can provide price estimates and advisors who can calculate the amount of taxes and investment capital necessary to produce the desired post-exit income for the owner. 

You also likely have experience or know other advisors with experience in the M&A market who have their finger on the pulse of market trends based on industry. Knowing the likely sale price and all the costs that accompany the sale helps eliminate these owner misconceptions, as well as being able to understand how buyers might perceive the value of the business.

4. The failure to preserve a company’s most valuable asset.

Retaining key employees and customers is crucial during a transition period. Exit Planning Advisors must work with owners to ensure a smooth transfer is promoted with the appropriate plans (Non-Qualified Deferred Compensation Plans, Stay Bonus Plans, etc.) in place so as to not lose the elements that made the company valuable in the first place.

5. The belief that the business owner can negotiate alone.

Buyers are the ones who are ultimately in control of the sale process. The use of highly trained deal professionals helps to level the playing field. As Exit Planning Advisors, it is important to help owners be wary of buyer pressures and enter the sale process with people who know the numbers and can help negotiate.

6. An unwillingness to recruit the best possible players for the deal team.

Business buyers have top-of-the-line accounting, legal, deal, and tax advisors. Using only a business owner’s existing advisors can sometimes put them at a disadvantage. Experience plays a role in the design, negotiation, and implementation of a deal. It is wise to build the Deal Team long before going to market to allow for enough time to determine an accurate asset gap, understand the fees that will arise, spot the areas of concern for potential buyers, and correct the deficiencies beforehand.

7. The belief that owner-initiated pre-sale due diligence isn’t worth the time, effort, or cost.

There is a difference between pre-sale planning and buyer’s due diligence that they will conduct as part of the sale process. While many owners wait until a letter of intent is signed, likely for time and cost reasons, it is advised to do so before even going to market. If an owner has engaged in Exit Planning and the estimated price and deal terms are satisfactory, the time and effort of pre-sale due diligence will only enhance the probability of closing.

8. Seller remorse.

Simply put, if the business owner is conflicted between staying and leaving, it is not the right time to go to market. Without considering the desired post-exit life, emotionally detaching from the company, or aren’t prepared to have their business scrutinized, business owners may crumble under the pressure of a third-party sale process. 

It’s important as the Exit Planning Advisor to be sure the owner is really mapping out the life they want and need post-exit and asking the right questions that will excite the owner about their next step.

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Eliminating the Deal Killers

Introducing your business owner clients to the most common Deal Killers and providing insights on how to eliminate them is an important element of the Exit Planning Process, especially since many could take months or years to phase out. In putting in the work to eliminate and address Deal Killers, business owners increase the probability of a third-party sale that works in their favor and aligns with their goals. The positive consequences for business owners of canceling the Deal Killers are:

  1. Expectations are more in line with reality.
  2. They have a preview of how effective the Advisor Team  is before they are working on the logistics of the actual sale.
  3. The amount of time it takes to close the transaction decreases.
  4. The buyer’s risk is minimized, which also reduces the amount of offers.

The root of many of the aforementioned Deal Killers lie in the business owner’s misconceptions and therefore it is up to you to encourage and motivate them to get rid of them. However, with the right knowledge and support, and with their financial and personal interests on the line, it is likely that owners will find benefit in working with you to eliminate these Deal Killers.


All eight Deal Killers listed in this article share a common cause: a failure to engage in Exit Planning. While other exit paths allow owners to begin transferring ownership before the owner actually exits, a third-party sale does not. The likelihood of a successful sale depends less on the condition of the mergers and acquisitions market or deal process itself as it does on the actions an owner takes today… before entering the market. 

To explore more Exit Planning content that will help you get business owners to act, start with diving deeper into:  

Eliminating Exit Planning Deal Killers

Battling Business Owner Villains

Fri, 09/09/2022 - 08:00

Written by: mernzen

Getting business owners to understand the importance of Exit Planning is unanimously one of the most common challenges faced by Exit Planning Advisors. 

Whether a new advisor or an experienced Exit Planner, you’ve likely heard excuses from business owner clients that run the gamut from being too busy to having uncertainty about what it entails. 

These hurdles often derail conversations, hindering an Exit Planning Advisor’s ability to not only emphasize the importance of starting an Exit Plan, but also to sell themselves as the solution to their comprehensive planning needs. 

Exit Planning Engagements & Storytelling 

If we were to tell the story of an Exit Planning engagement with the plot characterized by the above challenge, we’d want to dig deeper into how the challenge has developed. 

There are a variety of “villains” that would play a significant role in the character development of the business owner. 

For some, it could be time and financial constraints, others don’t see planning as an urgent need, and some simply don’t know where to start or assume another one of their advisors will handle their exit when the time comes. 

At the end of the story that is an Exit Planning engagement, the ideal transformation of the business owner is that of relief, accomplishment, and achievement of an unimaginable reality. 

In order to position yourself as the hero, let’s take a look at some of the most common “villains” that inhibit an Exit Planning engagement:  

External Villains: 

  • Noise 

Many business owners argue that adding another advisor to their mix of hired professional advisors just adds one more voice to the conversation. Between an accountant, insurance provider, financial advisor, attorney, and/or business consultant, it may sometimes be hard for an owner to realize the importance of bringing someone in to manage these relationships and roles as it relates to their exit strategy and long-term business goals. 


The Role of the Advisor in the Creation of an Exit Plan
  • Pre-Defined Exits

There are times when owners disregard Exit Planning with the pretext that their Exit Plans are already set in stone. Suppose a business has been in the same family for many years. To these owners, they don’t see importance in looking into paths outside of family transfers and assume they’ll just transfer management to a relative when the time comes, with minimal planning necessary.  

  • Expectation to Leave a Legacy

Another concern, particularly of family businesses or location-specific businesses, is the pressure to leave a legacy. Whether the desire is to place emphasis on the family’s impact or to leave a lasting mark on the community, owners often carry the stress of making sure they are doing their part to make meaning of their work.   

  • Death or Disability 

Death and disability are events that no one wants to think about, let alone plan for. The truth of the matter is that if either circumstance occurred suddenly, the business would be severely disrupted without any planning for the “what ifs.” 

  • Unexpected Events 

The modern business landscape, and the Exit Planning industry, has plenty of variables. Especially in light of the recent pandemic, whispers of an upcoming recession, and the “great resignation,” unexpected situations can arise at any time. Planning for a successful future does not happen without the preparation for such surprising events. Just like death or disability, these unexpected events create disruption that can take a toll on your client’s business, directly impacting the transferable value of the business.  

Internal Villains: 

  • Lack of Clarity 

Many Exit Planning Advisors have been hearing of planning fatigue from their clients. Planning fatigue is when business owners are exhausted by either the act or thought of planning their business exit. This fatigue likely stems from a lack of vision, or an inability to see the positive, full-picture impact of Exit Planning.  

  • Lack of Communication 

The work that goes into Exit Planning appears daunting to business owners. In this case, they likely have not been informed about the process in a way that is accurate or digestible to them. Communication on what goes into planning, the timeline, as well as a business owner’s role is critical to build momentum and move forward an Exit Planning engagement. 

  • Procrastination 

Another common objection that business owners share with their Exit Planning Advisors is, “I don’t have the time to do this right now. Let’s talk about this later when I’m not so busy running the business.” This sentiment usually arises for one of two reasons: 

  1. Business owners feel the current tasks they have on their plate are more pressing than planning. 
  2. Business owners are intimidated by how much work Exit Planning seems to be and want to stick with what they know. 
  • Scared of losing control 

Successful business owners often start businesses because they want to be in control. As entrepreneurs and leaders, business owners are used to having a say. When it comes to a discussion on when and how that control goes away, it’s no surprise that owners are avoidant. 

It is key that with this objection, as well as many of the others listed here, that you show the owners that Exit Planning actually gives owners more control: over their successor, their values-based goals, and their personal and financial futures.  


Combatting the Villains: 

Perhaps combatting villains and persuading clients against their common misconceptions was not exactly what you had in mind when you began working with business owners. However, there are a handful of ways to do so that all require telling a good story: one with you, the Exit Planning Advisor, as the hero.  

Takeaways & Tips: 

  1. Exit Planning Advisors strive to help business owners identify and prioritize objectives with respect to their businesses, their employees, and their families. Be clear, concise, and communicative about what the vision looks like at the end, and what the steps are in order to get there. 
  2. Make the most of the initial meeting so that you ensure you get another one. Do this by asking good questions that ultimately drive better planning conversations, as well as personalizing the client-advisor relationship so that owners feel understood. 
  3. Put an emphasis on building transferable business value. No matter their timeline or exit path, building business value will help them in the present, which is what they are likely more focused on if they are hesitant to plan.  
  4. Timing: While it is important to keep a positive outlook, it is also wise to inform business owners of the risks of waiting to plan. Starting sooner has obvious benefits, while procrastinating only puts the owner’s goals in jeopardy. 
  5. Being able to define your client’s goals goes a long way. Using active listening in each conversation to determine whether legacy, personal profit, tax savings or something else is of most importance to them will help to move along the process, one step at a time.   

All in all, telling your story personally and strategically, no matter what villain is lingering around the corner, matters to the business owner. There is strength in your story and it paves the way to becoming your client’s most trusted advisor.

To learn more about how BEI’s tools and resources can help to differentiate your practice and combat misconceptions, schedule a meeting with us today. 



Battling Business Owner Villains

Discover Exit Planning with Doug Easton

For over 20 years, BEI has helped advisors like you build relationships with their clients. We understand having a passion to help your clients reach their goals. 

To do so, advisors need to stand out from the crowd, a framework to help clients achieve their goals, and a way to expand the Exit Planning conversation. 

Join us for this live webinar on the BEI tools and resources available to help you seamlessly integrate Exit Planning into your practice and go from "service provider" to your client's "most trusted advisor." 

Learning Objectives:

Stop Looking for Customers... Start Looking for Referral Sources

The chances of you walking into a networking event where you’ll meet your perfect prospect who needs your product or service at that EXACT point in time are virtually zero.  The chances of you walking to the same event and meeting someone who can lead you to your perfect prospect are virtually guaranteed.  Join Sigi Loya, Owner of The Alternative Board (TAB) in Pittsburgh, PA, to learn the process of identifying the perfect referral sources and how to get an appointment with them every time. 

Exit Planning for Forever Owners

Fri, 07/29/2022 - 08:03

Written by: mernzen

Have you ever worked with a business owner who is so invested in their business it seems they might never leave it?  

For some business owners, this might actually be the case. 

According to the 2019 Business Owner Survey, 81% of business owners want to stop working in their businesses in the next ten years. However, only 56% of those respondents plan to sell or transfer ownership. Which means roughly 25% of business owners have no declared intention, leaving us with a unique subset of business owners we’ve dubbed as “forever owners.” 

Forever owners, as discussed more in a Why We Plan podcast episode, “Planning for Forever Owners,” are those owners who have reasons they want to continue to own the business, but do not want to put in the day-to-day work anymore. They want to leave the business, but they do not want to sell it. They prefer to maintain ownership, but perhaps have become burnt out on the built-up managerial tasks that have been placed on them over the years. They want to reap the financial and legacy rewards of ownership – but do not want to come into the office or deal with the headaches any longer.  

This sentiment, as shown in the survey, typically lies among those in the baby boomer generation of business owners who have been immersed in their companies for a long time. As an Exit Planning Advisor, there are ways to approach this demographic by simply shifting focus and showing them the importance of Exit Planning, even if without a sale or ownership transfer at the end.  

How Exit Planning Advisors Can Approach Forever Owners 

The typical work of an Exit Planning Advisor is aimed at a sale to an outsider or a transfer to an insider involved in the business (a child, key employee, etc.). However, working with these forever owners can be just as important because if the owner wishes to become less involved over time, transitions and plans need to be put into place so the business can carry on without their involvement.  

Essentially, forever owners need to create an Exit Plan, just without an ownership transfer at the end. As an Exit Planning Advisor, the following tips should help you in working with forever owners to make an Exit Plan for this unique path:  

  1. Rephrase the Question 

At the beginning of an Exit Planning conversation, you might ask a prospect, “When do you want to leave the business?”  To a forever owner, their answer is: “never” In order for the conversation to progress from here, it would be wise to rephrase this question in regard to the business owner’s relationship to the business.

Try questions like:

  • What is your current relationship with the business?  
  • What is good and not good about the business?  
  • How do you want that relationship with your business to change in the future? And, do you have a timeline for this change?  

Forever owners may or may not have a timeline as they hope to just stop doing the things they do not want to do anymore on their own terms. However, getting to the root of what management and leadership responsibilities they currently have and those they want to give up eventually will assist you in helping them create a timeline. In addition, knowing these goals will help create actionable items to get them to the relationship they want with their business in the future.  

  1. Focus on Next-Level Management   

If the business owner plans to no longer be around, who will be? No matter the timeline of these forever owners, if they want to stop working one day, there will need to be some work done in improving next-level management. Next-level management, in almost all cases, is the most important value driver that owners should aim to instill in their companies.  

Next-level managers are those who know how to grow a company and can work with customers, vendors, advisors, consultants, and others in the market at levels to which your clients aspire to grow their companies. Forever owners can assess whether current managers can drive growth and bridge any asset gaps that would be needed for them to separate from the business.  

Determining who is going to take the reins and deal with those day-to-day tasks, as well as allocating the time it will take to train them, is a big factor that can be planned for ahead of time.  

3 Tasks for Owners in Building Next-Level Management
  1. Build Business Value

In any Exit Planning interaction, working to improve transferable value – what a business is worth without the owner’s presence and involvement – is what drives a successful exit. Increasing overall transferable business value drives a successful exit, even if not a traditional exit.

Next-level management, for example, will naturally improve business value. However, there are a variety of other Value Drivers that Exit Planners can help forever owners with, such as: diversified customer base, sustainable cash flow, competitive advantage, and recurring revenue, to name a few.  

The Top 9 Ways to Increase Business Value
  1. Business Continuity Planning  

No business owner wants their business to suffer because of their own failure to plan for all possible scenarios, especially when their own involvement in the business is concerned. As an Exit Planning Advisor, you know firsthand what it takes to coordinate planning efforts that include a variety of considerations, risks, stakeholders, and timelines. 

 Business continuity, which is at the core of Exit Planning, is being able to keep a business running through unexpected events and without the owner at the helm (which is a forever owner’s dream!). Exit Planning will help ensure that proper “what if” initiatives are put into place to mitigate risks and put processes in place in case of emergencies.  

  1. Other Considerations:  

Shared Ownership 

Forever owners want to maintain their stake in the company, but perhaps they would be open to shared ownership if presented with an opportunity. Without a sale at the end, it can be hard for business owners to replace cash flow and compensation of a well-run business as a means of income when they leave. 

With shared ownership, business owners can reallocate the percentage of ownership as the business grows. For example, with an incoming co-owner, their percentage of ownership grows equal to the growth they accomplish. With this structure, the remaining ownership of the forever owner maintains value as the company grows.  

Alternate Exit Options  

Business owners have plenty of options in terms of business exit paths. For forever owners who intend to leave the business but maintain ownership, they might not care to hear about other options. However, as an Exit Planning Advisor, it is important to have knowledge of each of the exit paths to share an alternative path that would be better suited. By getting to know their post-exit goals, it may deem a conversation about an exit path that might help them reach their goals in a way they hadn’t considered.  

The Bottom Line  

While “forever ownership” may not be a traditional exit path, it is still important to put in the Exit Planning work. Even without an ownership transfer, aspects of Exit Planning come into play so that the business continues to be successful when the owner chooses to stop working. By focusing on the relationship, the owner has with the company, building business value and next-level management, and securing a business continuity plan, Exit Planning Advisors can ensure that forever owners are prepared to separate from their business on their terms.  


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Exit Planning for Forever Owners

Selecting the Best-Suited Business Exit Path

Fri, 07/22/2022 - 08:21

Written by: mernzen

Those who have been following BEI for some time know that there are weekly opportunities for Exit Planning education in the form of online webinars. BEI believes that some of the best insights and advice come from peers who are actively using Exit Planning strategies in their daily work, which is why we invite guests and strategic partners to host some of the webinars.  

In today’s blog, we want to feature one of our recent presentations put on by Footprint Capital as it gave an informative take on each of the business exit paths. Michael Butler, Senior Director of Footprint Capital, is responsible for leading sell-side and buy-side engagements with business owners. In addition, Michael cultivates relationships with clients, prospects, centers of influence, private equity firms, and family offices. His diverse and uniquely suited background helps him to advise owners on their business exit strategies, no matter their preferred exit path.  

Titled “Everything You Need to Know About the Exit Process,” this webinar gave a great overview of the benefits and downfalls of each type of exit path. Sharing notes from this portion of the presentation gives a functional, high-level pros and cons list of the various business exit paths, all in one place. In addition, the links included in the descriptor lists below link back to more in-depth BEI blog posts about specific exit paths. 

Footprint Capital’s Take on the Exit Planning Process 

Footprint Capital is a mergers and acquisitions firm at its core. However, as Michael and many other BEI Members would attest, the Exit Planning Process requires advisors of many industries to play a role.  

Exit Planning combines the plan, concept, effort, and process into a clear and simple strategy to build a business that is transferable through strong human, structural, customer, and social capital. Regardless of the specific industry an advisor serves, those who act as Exit Planning Advisors:  

  • Look at Exit Planning as a business strategy 
  • Seek to build, harvest, and preserve wealth  
  • Work to identify, protect, build, harvest, and manage enterprise value  
  • Simplify the process and clarify the roadmap to success 
  • Create and document a plan  

The timeline and tasks required when assisting a business owner choose their exit strategy.

This is an image that Footprint Capital used in their webinar outlining the timeline and tasks to use when assisting a business owner in finalizing their exit strategy.

Types of Exits: Inside & Outside  

There are many types of exit paths - both to insiders and outsiders

Business owners have plenty of options in terms of business exit paths. With the large number of choices to make, they often find themselves at a crossroads, faced with choosing which business exit path is most reasonable and potentially most profitable. It is up to the team of Exit Planning Advisors to ask the appropriate questions that will get to the root of their post-exit aspirations. They should also lay out the pros and cons to each path in a way that shows the owners which path makes the most sense for their personal and financial goals and give them a starting point. 

Pros & Cons of Inside Transitions  

Family Transfer  


  • Business legacy preservation 
  • Planned from an earlier start   
  • Lower costs involved 
  • More control of the transition process  
  • Less disruption to business operations



Sale to Employees (Employee Stock Ownership Plan, ESOP)  


  • The business stays in the “extended family.” 
  • Shares purchased with pre-tax dollars by the ESOP  
  • Taxable gain on the shares sold to the ESOP by the owner may sometimes be deferred (1042 rollover
  • ESOP is an employee benefit and may cause employees to act like owners 


  • Can be complicated and expensive 
  • May not work for some entities (culture) 
  • Company compelled to buy back shares from departing employees (repurchase obligation) 
  • Generally will not maximize proceeds (Fair Market Value standard) 


Management or Partner Buyout  


  • Business continuity 
  • Highly motivated buyers 
  • Preserves human capital 
  • Planned from an earlier start 
  • Can be combined with private equity to access additional capital and resources for growth  


  • Distraction 
  • Threat of flight (coercion of owner) 
  • Illiquid buyers 
  • Lower price and heavy seller financing (increases risk)  


Pros & Cons of Outside Transitions  

Strategic Buyer or Independent Sponsor 


  • Higher price (generally highest of all options) 
  • More cash up front  
  • Business owners can walk away faster 
  • Stable deal terms  


  • Can create distraction or loss of focus for the business owner  
  • May give way to privacy concerns 
  • Can be emotional for owner  
  • Potential employee concerns  


Private Equity & Family Office  


  • Higher price (generally at or near highest of all options) 
  • Often the ability of the owner to maximize total business value and retain equity 
  • Retention of employees and incentive to key people 
  • Experienced and professional buyers  


  • Owners are generally required to remain working post close 
  • Can create distraction or loss of focus for the owner 
  • May cause privacy concerns by involving key employees  
  • Sell side process sometimes seems complex to business owners 


While this list is not comprehensive, it is wise for advisors involved in the Exit Planning Process, no matter their industry, to be familiar with each of the business exit paths in order to determine which is best suited for their client’s situation. Many concepts that fall under each of the exit paths seem complex and unfamiliar to business owners and it requires Exit Planning knowledge, even if just at a high level when working with business owner clients.  

To begin gaining knowledge in Exit Planning, take a look at the BEI schedule of free weekly webinars & tune in to learn some of the industry’s best tips and tricks.  

Additionally, to listen to the recording of the webinar outlined above by Footprint Capital’s Michael Butler, visit the link below. In this recording, Michael continues to further break down the role of advisors, as well as a step-by-step guide to the sell-side process.  

Watch the Webinar Recording

Selecting the Best Suited Exit Path