As aging baby boomers get closer to retirement and exiting their business, many put exit planning in the 'too hard' basket - delaying the inevitable and putting off the sometimes-difficult decisions.
By a long way, the most successful exits come with early planning, detailed preparation, and careful strategy. But strategy takes time. The longer you have to plan and prepare, the better the outcome and the more options available to you.
Some exit options take years to successfully implement.
A management buy-in or an Employee Share Ownership Plan (ESOP)
can take several years as the employees need to fund the acquisition.
If you leave it until the last minute this option is simply not possible.
Most business owners are keen to maximize value on exit - and they should - they deserve to get paid good money for the years of blood, sweat and, tears they have put into the business. A big payday is usually not the number one factor, however. Most owners are far more concerned about the ongoing success of the business, the wellbeing of their employees, looking after customers, suppliers, and other stakeholders. For many, the legacy they leave is of the utmost importance.
In order to successfully maximize the business value at the same time as preserving a legacy - exit planning is key. More than a few well-respected business advisers - Steve Covey and Michael Gerber for example - talk about an exit strategy being important. They advocate an early start.
Covey's second habit is, "Begin with the end in mind"