By: Patrick Ungashick

Let me share with you three quick and true stories of business owners, and how each failed to achieve and maintain financial freedom at exit. 

Story 1 – Joe 

When I first met Joe, he was sitting in his desk chair, a broken man. He had sold his trucking company a couple of years earlier, expecting to fully retire. Joe had received some cash at closing, but a large portion of the deal included debt, financed by him. Shortly after selling, the economy had softened, and the new owner made some bad moves in the market. The company plummeted and defaulted on its payments to Joe. As a result, Joe had to take the business back. However, by then, the company was a shell of its former self, and market conditions stunk. To keep it afloat, Joe had to put back into the company much of the cash he had received at closing. Joe was tired. Joe was dejected. Joe was broken. 

Story 2 – Neal 

Neal was one of several partners in a convenience store company with locations across the midwestern US. Neal and his partners sold for $75 million. Neal netted about $15 million, and at the ripe old age of 50, he then had to find something else to do. We advised him to allocate $10 million to invest a new company while setting aside $5 million for safe, conservative investments. The $5 million, if allocated prudently, could provide for his family for the rest of their lives. Neal agreed with this recommendation. That is, until a few months later, when he purchased a manufacturing business for $30 million, putting all $15 million of his money into the deal.  

Neal believed he had the Midas touch when it came to running a company, and he was confident this next one was a future gold mine. The seller also believed the company had a bright future, which is why he only sold Neal 75% of the company, keeping 25% for himself and agreeing to stay involved. Within weeks of the sale, Neal and his new partner were squabbling. Within months they were openly fighting. Lawsuits followed. Revenues fell as customers fled. Profits evaporated as key employees bailed. Neal ended up losing everything.  

Story 3 – Dan 

Dan was contacted out of the blue by a strategic buyer to acquire his garden equipment manufacturing company. At only $1 million in adjusted EBITDA, Dan’s company was fairly modest in size, but the buyer offered to pay ten times earnings in all cash at closing. Dan could not refuse. After paying off company debt and taxes, Dan walked away with about $5 million.  

Entranced by selling for such a large multiple, Dan looked closely at his financial picture only after his exit. When he did, Dan realized that he could not conservatively invest the $5 million and maintain his family’s lifestyle for the rest of his life—he would run out of money. Dan’s three options were to: immediately find new work, cut his standard of living, or invest more aggressively. Dan chose the third option. He invested half of his funds into some raw land he intended to develop. His timing could not have been worse, for only a few months later, the real estate bubble burst. He also invested heavily in a local community bank, which eventually folded when a recession hit. Within a couple of years after selling this company, Dan owned some empty acres, some worthless bank stock, and a few hundred thousand dollars in cash.  

Reaching Financial Freedom 

All three of the business owners built fine companies. All three exited happily—or so they thought at the time that they exited. All three of them sold their companies for a compelling price. Also, unfortunately, all three of them failed to either achieve or maintain financial freedom.  

Financial freedom is not just some buzz phrase, either to business owners or to us. We define it to mean reaching the state where working to generate income is a choice, rather than an economic necessity. Many business owners do not wish to ever fully retire. Entrepreneurs often see themselves “working” for nearly all their lives. Despite that, practically all business owners aspire to reach a point where work is a choice and not a necessity. That is financial freedom. It is the number one goal at exit for the vast majority of owners.  

Unfortunately, many owners fail to reach financial freedom at exit, walking away with too little assets and income to meet the need. Other owners seem to have enough at exit only to make any one of several mistakes that set them back into a shortfall. Either way, if you find yourself coming up short, it will be too late to turn back the clock, and you will find yourself facing a list of undesirable choices. 

There is only one sure way to reach financial freedom—you must create a valuable company and have a sound exit plan. Both elements are required. Just producing a valuable company is not enough (see the previous stories for evidence.) Building a valuable company without a sound exit plan is like rolling the dice with many chips on the table. You might win, and you might not. Why take that risk? 

To help you reach financial freedom, you need a sound exit plan that addresses ALL of the following questions and issues: 

• How valuable does your company need to be at exit? 
• Are you on track to get there—and if not, what do you need to do about it? 

• What makes one company more valuable at exit than another, and how can you maximize value in your company? 
• How much money can you safely pull money out of your company between now and exit to reduce risk? 
• What can you do to reduce taxes now and at your exit? 
• How can you build and execute a post-exit financial plan that reduces risk and preserves financial freedom? 
• What will you do in life after exit, and how can you make sure you don’t over-invest or risk too much? 

Any exit plan that fails to address each of these issues, thoroughly and carefully, leaves you at risk, and you have worked too hard and achieved too much to come up short. 

Our website is full of educational materials on this topic. To help you get started, consider the following free materials: 

Cheat Sheet: “What Does an Exit Plan Look Like” 

Free Ebook: “The Exit Magic Number™” 

Free Webinar: “You Only Get One Shot” 

If you have a quick question coming out of this article or, if you want to discuss your situation in more detail, we can set up a confidential and complimentary phone consultation at your convenience contact Tim 772-221-4499

By: Patrick Ungashick

There once was a man engaged to be married. He had never married before, but he had seen what a happy marriage could do for people, and unfortunately, he also had seen what an unhappy marriage could do to people.

The man hoped his marriage to his future spouse would be happy and successful. So, he committed to working with a minister experienced in preparing people for marriage. The minister helped people know, anticipate, and address the issues and challenges that often come with marriage. The minister got to know the man, assessed the man’s readiness for marriage, and then gave feedback and advice to help the man enter into a happy and long marriage.

The man also wanted to share the wonderful moment of his marriage with the people closest to him and his future spouse. So, he committed to working with a wedding coordinator. The wedding coordinator designed a wedding event that would share the couple’s joy and happiness with all of the people whom they cared about, and would run smoothly without stress or unwelcome surprises.

Eventually, the man married. He and his spouse had a wonderful wedding, thanks at least in part to the wedding coordinator. And they lived happily married ever after, thanks at least in part to the minister.

This simple parable can help explain the difference between an exit planner and an investment banker, which is a common question we hear from owners who intend to sell their company. It’s an understandable question, for in many ways an exit planner helps prepare the company for sale, a sale that the investment banker is charged with making happen. But there are key differences between exit planning and investment banking, which is why it is important to think about these two roles separately. In some cases, it can make sense to work with the same firm or team to fulfill both roles, but in other cases, it’s beneficial to work with separate teams.

The man (or woman) seeking to marry is like a business owner seeking to exit, in this case, by selling his company one day. Just as the man has never married before, but he has seen good and bad marriages, the business owner has never exited before, but is aware that some exits are happy, but many are not. Exit, like marriage, changes one’s life in many ways. Being unprepared for exit can lead to significant struggles, just as being unready for marriage.

The minister (or priest, rabbi, counselor, etc.) is like an exit planner. Just as the minister is concerned with the individual’s overall best interests and happiness, so too is the exit planner. The exit planner’s mandate is to help the owner achieve his or her overall exit goals, which often includes: reaching personal financial freedom, leaving the company in good hands, exiting on his/her own terms, and having a sound plan for what to do next in life after exit. To be effective, the exit planner must get to know the owner and the company, and then advise the owner on the best plan and course of action, which may include—depending on the owner’s goals—selling the company. However, at all times, the exit planner must remain objective and committed to achieving what is best for the business owner.

The wedding coordinator is like an investment broker (or business broker, M&A advisor, etc.). Just as the wedding coordinator is focused on a singular event and outcome—the wedding day, the investment banker is focused on a singular event and outcome—the sale of the business. To be effective, the investment banker must be dedicated to the difficult and sometimes fragile process of selling the company. Selling a company is never guaranteed, not to mention selling for an attractive price and favorable terms. Just as the wedding coordinator seeks to make sure everything goes off smoothly with no critical detail unaddressed, so too the investment banker must carefully choreograph the process to minimize factors or risks that can hinder or even block the company sale.

When working for the business owner who wants to sell his or her company, a close and synergistic working relationship typically exists between the exit planner and the investment banker. The exit planner, typically engaged three to five years prior to exit, can help the business owner identify and implement tactics that will increase company value at sale and reduce risk. This tees up the company for the investment banker, who typically comes into the picture about a year before the final sale.

However, note that the two professionals, while serving the same client, do not share the same focus. The exit planner, like the minister, is focused on the business owner’s overall goals and best interests. The investment banker, like the wedding coordinator, is focused on the sale process and closing. Ideally, these two elements remain in alignment, meaning that selling the company (what the investment banker wants) is in the best interests of the business owner (what the exit planner wants). However, things can happen that bring into question whether selling the company is in the owner’s best interests at that time. Common examples include:

• The offer(s) to purchase the company is for a lesser amount that the owner needs or wants
• The offer(s) to purchase the company include terms and/or conditions the owner finds unfavorable
• The offer(s) to purchase the company come from a potential buyer(s) that the owner feels is not a good culture fit
• The business owner comes to realize that he or she is not personally ready to sell the company at that time, often because the owner is unsure about what he or she would do without the business
• The business owner grows unsure about selling the company to an outside buyer and instead seeks either an inside sale or passing the company to the next family generation

Should any of these occur, the investment banker and exit planner may find themselves working toward different outcomes. This benefits nobody, especially the owner. Experienced exit planning and investment banking advisors know these issues and seek to minimize the likelihood that these situations occur. In all cases, business owners and their advisors need to remain clear through the entire process what role every advisor is playing.

If you have a quick question coming out of this article or, if you want to discuss your situation in more detail, we can set up a confidential and complimentary phone consultation at your convenience contact Tim 772-221-4499.

Are you thinking more and more about your future exit and realizing you have more questions than answers? Do you know what you want out of your exit but are unsure of the best plan to achieve your goals? Are you wrestling with your ideal time to exit? Unsure how to talk to your employees? Worried about your business partners? And what can be done to minimize taxes?

These are just some of the questions we commonly hear during the confidential, complimentary 45-minute consultations we hold with business owners to help them get ready for exit. For the fifth year in a row, this month we are standing by, ready to schedule a free consultation with you to answer your exit questions.

Feel free to watch this short video to learn more.  Or, schedule your consultation here or by calling 772-210-4499 .

Selling your company to a strategic buyer. Private equity. ESOPs. IPOs. Intentionally defective grantor trusts. There seems to be a dizzying list of different ways to exit from your company. You have likely heard of most of them, and perhaps you are considering one versus another. Yet there might be one undervalued exit tactic that you have not heard of and need to know about. It is called a “non-control recap” in short vernacular (recap is an abbreviation of recapitalization). Here’s how it works and why it may help achieve your exit goals.

What is a Non-Control Recap?

Simply put, a non-control recap is selling a minority interest (non-controlling) portion of your company to an investor (recapitalization). Historically for mature companies, non-control investors were mostly private equity groups (PEGs), but family offices are an emerging player in this market. Non-control recaps are an alternative to a full sale of the company, although a full sale can still be pursued at a later date.

Why Consider a Non-Control Recap?

This exit tactic offers business owners a number of important advantages, particularly in comparison to selling the entire company. If you are your company’s sole owner, you can gain significant liquidity by taking home cash from the partial sale while continuing as a partial owner and leader of the company. You can reduce personal risk, as you diversify your net worth by gaining cash and potentially reducing or eliminating personal guarantees with an additional equity partner involved. Non-control investors prefer a passive role in the company, leaving you in control of day to day operations and decisions. With the right investor, you gain a valuable strategic ally in growing the company. Non-control investors may bring strategic opportunities to the company that were previously not available, such as opening new markets, introductions to prospective clients, or perhaps identifying and assisting with acquisitions for growth. Non-control investors typically require minority representation on your board, bringing experienced leaders to help the company to its next level of growth. Finally, you can remain the majority owner of the company until a later date, at which point you may choose to sell the entire company at your full and final exit, gaining another round of personal liquidity.

What If You Have Partners?

If you are not the company’s sole owner but have partners, the advantages of a non-control recap include all of the above, plus flexibility to customize the investment to the needs of individual co-owners. The level of liquidity can be tailored such that each co-owner can decide to sell some to all of his or her interest. The ongoing roles can be customized for each owner as well, permitting some to leave at closing and others to continue working in the company. A non-control recap can also be the vehicle for key management to own a portion of the company going forward, as a retention and incentivization strategy and/or as a stepping stone toward a future full sale of the company to the next generation of employee-owners.

Is There a Catch?

Non-control recaps are not for every owner or every company. Investors look for companies that are profitable, offer strong growth potential, and have capable leadership. While a minority investor remains hands-off mainly in the day to day operations, non-control investors will require supermajority rights on issues like selling the entire company or raising additional capital or debt. Another point to consider: the non-control sale may receive a lower valuation multiple than what might be achieved with a full sale, reflecting the investor’s minority position. However, this potential disadvantage is offset with the opportunity to pocket some liquidity now and retain ownership for the full sale at a later date–hopefully at a higher total valuation after having grown the company to the next level.

Non-control recaps may not be the right tool for every business owner, but they offer compelling advantages that should be considered prior to deciding to sell the entire company. To learn more, review our webinar on this topic called “Cashing Out Without Walking Out” or contact us to discuss your individual situation.

To discuss your unique business, and how to plan for and achieve a successful exit, 

Call 772-210-4499  or email Tim to schedule a confidential, complimentary consultation.

We occasionally hear business owners say something like, “My exit strategy is to hire a great management team to run the company, so I can step back and just collect a check.”

Hiring quality leaders for your business is always desirable. Yet, this tactic on its own will not produce a successful and happy exit for these five reasons:

1.Even with highly capable leaders running your company, you still own the company.A significant portion—perhaps the majority—of your wealth remains locked inside the business. At some point you likely will want to access some or all of your capital tied up in the business. This requires an exit strategy.

2. Hiring excellent leaders may allow you to step out of the day-to-day operations of the company, freeing up a large portion of your time — but only a portion.Total absentee ownership is a fantasy. You will need to continue supervising the team’s performance, reviewing business plans and budgets, and approving major decisions. Reducing your involvement in day-to-day operations may help you pursue other interests, but you remain closely tied to your company.

3. In the real world, things change.At some point the management team that you hired to run the company will change, pulling you back into the company’s operations. If a key leader retires, dies, or quits, you will need to identify and hire a replacement. You might also have to temporarily fill in for the missing leader until the replacement has been hired and trained. Or, if a key leader has subpar job performance, you have to do the work of supervising that person more closely and perhaps terminating him or her. In our experience, losing just one key leader from a carefully-built team makes it frustratingly clear to the owner that you have not exited from the company.

4. As long as you own the company, your risks remain unchanged.Many owners seek to reduce personal and financial risks as part of their exit planning. Even with an excellent leadership team in place, the business’s risks are still your risks. You still have to personally guarantee the business debts where required. If the business gets into financial, tax, human resources, or legal difficulties you are still impacted. Any significant capital expenditures are still your decision and risk. Your personal financial net worth remains highly concentrated within the company. Letting a management team run your company typically does little to reduce your personal and financial risk.

5. Even with a highly capable team running your company for you, at some point you will still need a plan for determining what ultimately happens to your ownership interest in the company.You have only punted the issue. Even if you do nothing until your death, your ownership in your company will still either pass to your heirs, be sold, or be shut down. You still have important goals and objectives to plan and execute.

Hiring a competent leadership team is never a bad idea. A quality team not only drives business success but also creates exit planning flexibility and opens up additional paths for your exit. It allows you to delay exit if you wish. Moreover, a quality team usually increases company value at sale or, if passing the business to your children, provides for a smoother transition. Competent leadership teams help business owners achieve successful exits.

However, hiring the team and sitting back to collect a check is not an exit strategy. You are still an owner with all of the responsibilities, burdens, and challenges that ownership entails. Therefore, you still need an exit plan beyond a highly skilled management team.

To discuss your unique business, and how to plan for and achieve a successful exit, Call 772-210-4499  or email Tim to schedule a confidential, complimentary consultation.

When do you need to get a business valuation?
Many exit planning books, websites, and advisors recommend getting a business valuation as one of the first steps in exit planning, if not the very first step. At NAVIX, we disagree. While business valuations are a critically important tool in certain situations, business owners should not rush into getting a valuation without careful consideration. The following six misconceptions explain why.

Misconception #1
A business valuation reveals what your company will be worth at sale.

Unfortunately, the only way to know what your company is worth at sale is to enter the market and see what potential buyers are willing to pay for it. While an appraisal by a valuation professional might produce a figure that is close to what some buyers might pay, not all buyers are the same. Buyers have different needs, interests, resources, and potential synergies. This is why it is not unusual to receive a wide range of offer prices when multiple buyers are bidding on the same company. A business valuation cannot anticipate every buyer’s motives and therefore cannot be expected to forecast a company’s final selling price.

Misconception #2
Business owners should get a business valuation at the beginning of their exit planning.

Getting a valuation at the start of one’s exit planning is unnecessary most of the time and might even be potentially harmful. At the start of your exit planning, you might not yet know if you need your valuation to aim high or low. What a business is worth is in part subjective. If you ultimately decide to pursue selling your business to an outside buyer, you hope and aim for a high potential price. But what if you decide to give the business to your children? If that proves to be your exit strategy, you will want an appraisal to aim for the lowest reasonable company value. To further complicate matters, if your exit strategy is to sell to an inside buyer (one or more employees), then depending on the circumstances the desired value could be high or low. Even if you believe that you know your exit strategy at the start, it’s not uncommon for owners to later change their exit strategy once they dig deeper into the exit planning process.

Getting a valuation right at the start of your exit planning is usually premature. You may waste time and money getting a valuation that aims in the wrong direction, and unfortunately once acquired, you cannot make the valuation just go away. Somebody, such as the IRS, may later ask to see that valuation and you might regret what it says.

Misconception #3
Having a business valuation will help you negotiate a higher price.

If, while attempting to sell your company, you find yourself negotiating with a buyer whose offer price is lower than your liking, you could try to get the potential buyer to increase its offer price by producing a third-party valuation that assigns a higher value than the initial offer. However, this tactic is unlikely to create much leverage for you. Most buyers will feel little pressure to raise their purchase price because the valuation comes from a third-party without a vested interest. A superior way to create leverage is to have multiple buyers competing to acquire your company, so that a bidding war ensues. Competition maximizes your leverage.

Misconception #4
Business valuations used for one purpose can be relied upon for another purpose.

Recently, a business owner whose company is partially owned by an ESOP (employee stock ownership plan) found himself in the midst of a divorce. ESOP companies are required by law to have an annual business valuation. This company’s most recent valuation calculated a total value of $10 million. The owner assumed that $10 million would be the value upon which his divorce would be settled. However, things became contentious and the divorcing couple ended up court. The divorce court ordered a new valuation, which came in at more than $30 million to the owner’s shock and dismay.

There are different methods to value a company, any one of which can produce a greatly different figure. For example, a privately-owned company’s value could be calculated based on its future earnings potential, its comparable market transactions, or its assets—or some combination of these three methods. Furthermore, valuations grow stale with time. A valuation done as recently as six months to a year earlier might be irrelevant if business or external conditions have changed. If a valuation was acquired for one purpose, it cannot be assumed that the valuation will be applicable or respected in other situations.

Misconception #5
Use a business valuation to keep score on how your company is performing.

We see this suggestion often. The idea is to get a valuation once a year (or sometimes even more often) to track and evaluate the company’s growth and the performance of its leadership team in particular. In fairness, publicly-traded companies are able to rely on this strategy because the stock market provides constant feedback on the company’s progress and value.

With privately-held companies, however, this tactic has two problems. First, as stated in Misconception #2 above, depending on your ultimate exit strategy you may later regret having on record those valuations stating the company is worth $XX amount. Second, in most situations this simply wastes money when a free alternative exists. All privately-held companies can and should track the key operational, sales, and financial metrics that drive healthy business growth. These metrics can be summarized on a dashboard to provide accurate and timely feedback on business progress and leadership team performance. This not only saves you the cost of a valuation but also provides leadership teams with an actionable tool for tracking performance.

Misconception #6
If a valuation is needed, you should hire the appraiser.

There are valid and important reasons to get a formal business valuation. Three of the more common reasons are:

• It is required for regulatory compliance (such as with ESOPs).
• You are doing important tax planning that requires establishing a business value.
• You are seeking to minimize or resolve contention between interested parties such as spouses or business co-owners.

If facing one of these situations, getting a business valuation is prudent and usually necessary. However, do not hire the valuation professional on your own. Speak with your legal advisors first. It may be beneficial to have your attorney hire the valuation professional and receive the appraisal on your behalf. When having a valuation done, it’s impossible to predict the outcome. The final number may be what you expected, or it might come in significantly higher or lower than desired. If your attorney commissions the appraisal, the valuation’s findings may be protected by attorney-client confidentiality, meaning you will not have to disclose its results to an outside party. Again, it’s important to consult your attorney on these issues.

In summary, business valuations are an important tool in the exit planning process but should not be your first step. Before getting a valuation, owners should clearly define their exit goals and plans. Then, owners can work with their tax, legal, and exit advisors to determine if a valuation is needed and the best course of action to follow.

To discuss your unique business, and how to plan for and achieve a successful exit, Call 772-210-4499  or email Tim to schedule a confidential, complimentary consultation.

Register for our next webinar:

The Home Front: Preparing Business Owners and Their Spouses for Success and Happiness After Exit

May 22, 2018 @ 2PM – 3PM EST

Exiting from a business creates change, both at work and at home. It changes routines. It redraws financial pictures. It reshapes social circles. Exit changes how we see ourselves, and our life goals. Unprepared couples may experience uncertainty, unease, and stress—no matter how financially rewarding the exit may be. When one spouse is not actively involved in the business, that person feels like an outsider, watching a life-changing event play out with little input. And, since most owners exit only once, neither partner in the relationship knows what conversations to have, and how to get started.

This webinar is the place to start. Business owners (and their spouses) who attend will learn:

• What are the key issues couples will likely face at exit and afterward
• How to prepare for exit’s impact at home: financial, family, lifestyles, and routines
• Exercises and tools to help couples achieve happy exits

Register

To discuss your unique business, and how to plan for and achieve a successful exit, Call 772-210-4499  or email Tim to schedule a confidential, complimentary consultation.

For many owners, determining how to exit is the hardest question. Yet it is essential because the answer identifies the issues and challenges you face and the appropriate tactics you need to consider for a successful exit.

Ben Franklin observed that death and taxes were two of life’s few certainties. We must add a third. Every owner will exit from his business, one way or another. Either during your lifetime or at death, your business will be given away, sold, or liquidated. These three outcomes are not exit strategies. The word “strategy” implies a desirable result. Death is not a strategy!

There are, in fact, four plausible exit strategies. Identifying as early as possible your most likely exit strategy creates a clear path to what is needed to achieve a successful exit.

The four possible exit strategies are:

1. Pass to Family

2. Sell to Outside Buyer

3. Sell to Inside Buyer

4. Planned Liquidation

Notice that selling your business to an outside buyer and selling it to an inside buyer (typically one or more key employees) are different strategies. Conventional wisdom often lumps these two options together as simply “selling the business.” Selling your business to an outside party usually is a completely different process from selling it to one or more employees. We differentiate between those two strategies because the issues and tactics used for each strategy are different.

It is also important to point out the fourth strategy, Planned Liquidation, does not mean failure. Unplanned liquidation could signify failure. Planned Liquidation implies that in a time and manner of your choosing, the business will close in an orderly way. Owners who intend to eventually close down the business still have an acute need for exit planning; they must adopt a current-cash based approach to converting their business wealth rather than a future-equity based approach. Contrary to conventional wisdom, most closely-held business owners need to incorporate some current-cash based tactics into their exit planning and cannot afford just to sit back and wait for a future-equity based payday.

The Exit Strategy Decision Tree

At first, you may not be sure of your likely exit strategy. A process-of-elimination approach often helps identify or solidify your most likely exit strategy. While circumstances and your ultimate exit strategy may change, determining the most likely strategy helps you and your advisors consider tactics to maximize exit results. An exit strategy process of elimination “decision tree” starts with the following statement:

I want family, who have the desire, ability, and youth to succeed me, to one day own my company.

Do you agree or disagree with this statement? If your answer to this statement is “Yes” then your exit strategy likely is to Pass to Family. Each of the four exit strategies uses a short, easy-to-remember (if not, borderline corny) descriptive term. Owners whose likely exit strategy is to pass the business to family are called Passers.

If you said “No” to the first statement, then you must select from the following three statements which best fits your situation. You may have more than one that could fit, but approach this like the standardized tests many of us took in school—choose the answer that “best fits.” Read them carefully, for each statement includes several important details:

My business clearly offers to an outsider Transferable Value significantly above book (liquidation) value.

If this statement best fits, then you have the chance to sell your business to an outside party and be paid for its value as a concern. In this case, you are an Outie.

The next statement reads:

My trusted employee(s) could now, or in the future with preparation, profitably run my business. They also have the desire to own my business and the youth to outlast me.

If this statement best fits your situation, then your likely exit strategy may be to sell to one or more key employee insiders – you are an Innie. Note that there are several important parts to this statement. The employee(s) ideally is trusted, prepared, has the desire, and will be young enough to take over. Remove any one of those factors, and this may not be a viable option for you.

None of these previous statements may seem right for your business. The last statement to consider is:

None of the previous statements fit well. Most likely I will close my business in an orderly manner at the time of my exit.

In this situation, your likely exit strategy may be Planned Liquidation. This owner must consider tactics that use the business’s current cash to convert value along the way. In simple words, squeeze the business dry. If this is you, you are a Squeezer.

Determining whether you likely are a Passer, Outie, Innie, or Squeezer is one of the most important steps in your exit planning. Owners in the four different paths face four different sets of issues, risks, and tactics. Knowing which type of business owner you are, allows you to focus on only those tactics appropriate for your exit goals.

Click here to download our free Exit Strategy Decision Tree infographic.

Read more about the four different exit strategies and the timing to begin your exit planning here.

To discuss your possible strategies, and how to plan for and achieve a successful exit, Call 772-210-4499  or email Tim to schedule a confidential, complimentary consultation.