Good Exit Planning is About Creating Choices
For many business owners, their business represents a significant portion of their personal wealth. Yet conversations about succession, transition, or sale, often don't begin until an owner starts thinking it may be time.
By then, some of the most valuable opportunities may already have been lost. A successful transition isn't simply a transaction. It is the culmination of decisions involving the business, the owner, the family and the owner's trusted advisors; and those decisions are easier to make when there is time.
The earlier a business owner begins planning for an eventual exit or transition, the more time there is to build value, prepare the people involved, and make deliberate decisions; rather than having circumstances dictate those decisions.
So perhaps the most important question isn't: when am I going to exit?, but rather: if something changed tomorrow - an illness, a divorce, a partner dispute, or an unexpected offer -would the owner, the business, and the family be ready?
The Real Work Happens Before the Transaction
An owner doesn't need to know when, or even how they will eventually leave the business to begin preparing. In fact, much of the work that prepares a company for transition can also make it a stronger and more valuable business today.
That preparation addresses four areas:
Business Value: What is the business worth today? What drives or constrains that value, and what can be done to increase it?
Financial Readiness: Is there a gap between what the owner will ultimately need financially and what the business is worth today?
Personal Readiness: What does life beyond the business look like? For many owners, leaving a business they've spent decades building involves much more than replacing income.
Family Readiness: Is the family aligned around future ownership, leadership, roles, expectations and wealth?
Encompass Valuation Advisors works alongside business owners and their trusted advisors to connect these pieces and develop an integrated master plan for the business, owner and family.
The outcome doesn't necessarily have to be a sale. It may be accelerating growth, transitioning to family or management, bringing in outside capital, stepping back gradually, or continuing to own the business.
Advisors Need Time
A successful business transition isn't simply a transaction. It is the culmination of years of decisions involving the business, the owner, the family and the owner's trusted advisors. Better decisions are possible when there is time to make them.
Tax, legal, estate, banking, wealth, insurance, valuation and M&A considerations are not separate conversations. They are interconnected parts of the same transition, and some of the most valuable strategies require considerable time to execute.
A sound financial plan also requires a realistic understanding of business value and future liquidity, while the business itself may require significant work to increase value and prepare for succession or sale.
The objective of Encompass Valuation Advisors is to bring these pieces together into one coordinated master plan. Once the plan is in place and the owner's advisors are aligned around its execution, the owner may not exit afterall. That’s the value of planning early - creating choices.