Feb 1, 201812:15 PMExit Stage Right
with Martha Sullivan
What exactly does an ‘exit planner’ do? Are you into funerals?
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In January, the Wisconsin Chapter of the Exit Planning Institute held its bi-monthly meeting simultaneously in Madison and Waukesha. The speaker, Scott Snider, vice president of The Exit Planning Institute, shared a story about a woman we’ll call Jane, who asked him “What exactly does an ‘exit planner’ do? Are you into funerals?”
Visions of old men in top hats and women in black lace grieving in a slow procession behind a horse and hearse danced in my head. I suppose it’s a reasonable question, but in our world exit planning couldn’t be farther from funerals. From my perspective, “exit planning” is all about breathing new life into a business, its owner, or both. The exit planner is the advisor that educates, supports, and facilitates owners on and through that process.
There are other terms that are often used to describe exit planning. The most common is succession planning. Another is transition planning. Sometimes, although not accurate, mergers and acquisitions, or M&A, may be used.
If we focus on succession planning, as it is most commonly referred to, there are often two paths for defining it. One path is the general passing of responsibilities from one person to another. For example, someone is training a less-experienced colleague to grow and step into his or her job, with its roles and responsibilities. The other path adds the technical transfer of business ownership to the assumption of roles and responsibilities. The second definition is the world that the exit planner lives in.
Further, succession planning may, to some, mean the transition of business ownership to an insider — an employee or a family member. They use the term M&A for deals between parties that aren’t insiders.
Realistically, succession planning is a great start but a more holistic approach is warranted. The effective exit plan considers all the possibilities and aspects facing an owner. It’s not just the technical transfer or transaction, which may feel like the end of an owner’s life. Viewing exit or succession planning through the lens of “transition” changes the image of a bleak funeral procession to visions of a spring vacation filled with sunny beaches and new life. Sound too good to be true? Stay with me here.
As discussed in my last blog post (Are you walking toward your business’ destiny?), a well-crafted exit or succession plan considers three key aspects of an owner’s life:
- Business — Is the business in good health and sustainable with and without you?
- Financial — Do you have the resources you need for life?
- Personal — What brings meaning to your life, inside and outside of work? How much gas is in your tank? What comes next?