President of Exit Planning Institute, the authority on Exit Planning education.

The common belief today is that when you are ready to transition or sell your company, whether internally or externally, you think about preparing for that transition through the typical mergers and acquisitions go-to-market process or an internal family succession. These plans are thought about and built typically 12 to 18 months prior to the business owner officially exiting. What most owners do not realize is that they are doing things in their company every single day that will impact their exit.

My company provides exit-planning education, and through this experience, I have seen that many American companies put on the private market sell for a valuation much lower than the owner expected or, unfortunately, do not sell at all. Tragically, many small- to lower-middle-market companies are forced to exit. These business owners are often pushed out of their company not on their own terms due to partner disputes, disagreements, stress on the business or other events like a global pandemic.

What if we changed the lens in which we look at exit planning? How would this change the narrative? What outcomes would be realized?

The new lens for business owners should be that having an exit strategy is simply a good business strategy.

Driving Value Through Intangible Capitals

To make this shift in perspective, let us start with the business itself. Business owners walk into their company every day with desires, needs and pain points. Those typically revolve around these questions:

• How do I attract and retain great talent?

• How do I drive efficiencies into my business to make my company more profitable and my people more productive?

• How do I continue to make my customers happy, engaged and entangled?

These are the intangible items that can drive significant value. Some experts call these people, processes and products, while others might refer to them as structure, human, culture and customer. Regardless, these intangible capitals contribute greatly to the overall transferability of a company. They are also the things that many business owners and CEOs care about and contribute to daily.

With this new lens, you can bring exit planning into the present and begin to focus on the now. With a process and framework, you should focus on these intangibles and make them deliberate and intentional in your company daily. By focusing on the now, you can make a greater impact on your business short term, while gaining value and increasing the likelihood of a successful and fulfilling transfer in the long term.

Establishing Your Personal And Financial Goals

But is the business enough? Included in this new lens should also be your personal and financial goals and plans. Having a strong, ready, valuable and transferable business is only part of the equation. To truly have a significant and fulfilling exit, you need to understand your personal purpose and what you want in the next phase of your life. Once that is established, just like the business, you can wrap a process and framework around achieving this set of personal goals and objectives. These tie into your personal financial plan.

By understanding your personal goals, you have established how much money you will need in the next phase of your life — a phase that will not include your company. This establishes your wealth gap. Then, the process cycles back around. Does the value of the business today fill your wealth gap? If the answer is “yes,” then it is time to ask yourself, “Am I ready to sell my company, and should I?”

If the answer is “no,” you need to go on a value-enhancement path where you can begin to grow value in your business by strengthening your intangible capitals.

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