Business Transition or Exit
[fname], many owners of privately-held businesses are not pro-active in
planning for their exit and the company's transition. This is true
mostly because the 'exit planning industry' is nascent and many owners are
simply not aware that a service exists to help owners with this complex
I advocate the position that owners should be pro-active and should actively
lead their exit plans by involving those that help them manage the
business. An owner's successful exit is an entry point for another owner
to take the company to the next level, creating potential opportunities for
the leaders in your organization.
However, without leading the process, it is not something that you can rely
on without proper planning. You might get lucky, but luck is rarely a solid
Exit Planning & Mountain Climbing
Let's first examine how leading an exit is different from growing a company.
We will use a helpful analogy – mountain climbing.
Climbing up a mountain requires determination, focus, strength, and
management of many obstacles. The ascent is often arduous, creating doubt in
the mind of the climber as to whether they will reach the pinnacle. There is
a summit that can be identified and a specific point at which one turns to
begin the equally, if not more so, challenging act of descending down the
On the way down a mountain a different skill is required. One's weight is
now working against them. There is a different need for balance and
coordination of activities. In fact, Sir Edmund Hillary is not so much known
for his ability to be the first Westerner to scale Mount Everest. Rather, he
is famous because he was the first to survive the descent. Will you, and
your business, survive your exit? The answer to this question may depend
upon the new leadership skills that you learn.
First Set the Path for Your Exit
Before the climb and descent begins, a plan is established to reach
milestones as well as the ultimate goal – you don't climb a mountain in one
day. It takes months, if not years, of preparation and the climb and descent
requires careful planning.
A strategic, long-term plan for the business – including alignment of
key employee's incentive compensation with that plan – is an excellent start
to setting the right path. When you take the time to formulate a strategic
plan as well as align key people, you put the Company on a path to
[eventually] succeed without you. When you can define a vision both for the
Company as well as for yourself, you can work faster towards being the
leader that your organization needs you to be to more effectively handle
your exit plan. Without direction, there is no catalyst for positive
You Need to be a Leader in Your Exit,
Not Just a Manager of the Exit
Your exit will require a different skill set than growing your business, the
same way going down a mountain requires different skills than going up. You
need to adopt a leadership mindset towards your exit. In fact, it will
mostly be your ability to let go of the responsibilities that you have grown
so attached to that will define the success of your exit. In order to let go
you need to build a team who can assume your responsibilities. And in order
to build that team effectively, you need to become a leader.
Empowering Others – An Unselfish Act
As you set your company plans remember that you are leading, not managing
these tasks. For example, management is more about getting a task done,
often with the self-centered objective of successfully driving a result.
Leadership, however, is about the empowerment of others.
When you move from management to leadership, you focus on the strength of
your team and begin to more effectively work yourself out of your job. Your
overall strategic plan should have you working hard to eliminate yourself
from the day-to-day running of the business. This is not so much to put you
out to pasture but more to increase the transferability of your Company to
someone else in the future.
Your Team Will Help Your Future Owner
Manage the Business
Your exit will depend on your team because that team will lead your
company into the future. Think of the situation in these terms - no matter
how you decide to exit, it is the company that will pay for the value.
Simply put, if the 'golden goose' stops laying eggs then an exit cannot be
It will be the team that you develop and lead to self-sufficiency that will
run and grow that company into the future. This is true whether you exit via
sale to an outsider, or whether you exit via internal transfer to managers,
family or employees. Someone has to run the business and be empowered to do
so. The team that you build and lead will be that catalyst for the future
and will define your exit.
Are You Developing Your Talent on a
A leader is able to see out over the horizon and prepare for changes within
the marketplace and the business. The success of your exit will depend
upon your ability to replace yourself in this regard.
Do you have a process for recruiting new talent and assessing existing
talent within your organization? Are you able to let go of large
responsibilities and trust that they will be handled well by those that you
lead? These are critical questions to ask and answer in advance of your exit
because turning over the reigns of a business is often an emotional event
for an owner. Working through this emotion and putting the right people in
place is an unselfish act that is done for the long-term growth and survival
of the business.
You worked hard to establish your position in your company, industry, and
community. Now you need to work just as hard to replace yourself in that
role. This unselfish act (or more appropriately, series of acts) sets the
stage for a successful exit because you are building your own replacement by
leading the organization to a whole new level.
As always if you need some advice, you're
welcome to email me of call me here at the office at 281-993-4530.
Charles Wilson, CPA/CFF, CGMA, CBEC
Charles Wilson, LLC
307 S. Friendswood Dr, Ste B-2
Friendswood, TX 77546
Charles Wilson, CPA/CFF,
CGMA, CBEC is a Certified Business Exit Consultant and is affiliated with
Pinnacle Equity Solutions, Inc., an Exit Strategies Training and Solutions
company. Parts of the content in this email are taken from previous
Pinnacle Equity Solutions, Inc's. newsletter library and website in
accordance with Charles Wilson's certification in Pinnacle's Certification
and Membership Program. All Copyrights are the properties of Pinnacle Equity
Solutions, Inc. and Charles Wilson, LLC and their respective owners.