Jun 25, 201911:35 AMExit Stage Right
with Martha Sullivan
Want the best vacation of a lifetime?
(page 2 of 2)
As the baby boomers have moved into retirement, they’re redefining what retirement is. It’s no longer sitting on the couch, watching soaps, and eating bon-bons. This generation of retirees is more active and intends to stay that way. Whether getting a part-time job or doing volunteer work, we want to stay busy and engaged. Another key factor contributing to satisfaction in retirement is how well they are financially prepared for it. Proper exit planning includes these crucial considerations.
Exit planning process contains many moving parts and pieces. Let’s summarize it in seven steps:
- Assemble your team — Exit planning, done well, should be a collaborative effort between your accountant, attorney, wealth manager, and banker. Bring them all together to ask them to help you in this journey. Find the one advisor who you feel can be your quarterback carrying the play onto the field and coordinating the team’s efforts.
- Understand your personal goals and objectives — This step may be the hardest because this is where your start planning the vacation. The sheet of paper is blank. What is it you want to do? What do your relationships look like and how will you take care of them? What legacy do you want to leave? When might you want to exit? What is Plan B if something unexpected comes along?
- Map out your personal financial goals — During this step, you reacquaint yourself with your current financial state relative to your lifestyle. Once that is understood, consider how that fits in with your personal goals and objectives. In essence, do you have the resources to fund the big vacation?
- Assess the value of your largest asset, the enterprise value of the business — There are a number of approaches that may be taken to assess the strength of your business and what levers can be pulled to drive value, from strategic planning to an operational review to a formal business valuation. Your team can help you tailor the best approach that fits your business.
- Gap Analysis — Armed with information regarding your financial picture, including what your business may be worth, the team can help you assess what, if any, gap exists between what your resources will support and the goals and plans you have for life after the business and/or retirement.
- Opportunities and options — There are three basic exit options: sell, transition to the next generation or management, or simply close and liquidate. All should be seriously evaluated. The options available to any one business owner can fall along many different points on that continuum. The efforts of Steps Two through Five create the framework to align your goals and objectives with your resources, and identify which options fit your situation.
- Exit Plan development and execution — There may be only one or may be multiple options that fit your situation. In this step, it is up to you — with the help of your team — to decide which option(s) you want to pursue and then set out the specific tasks that need to be performed to execute that plan. Depending on the state of the business, it may include taking actions to enhance the value drivers. It may include specific estate and estate tax-planning initiatives. Your plan may include diving into learning new hobbies or pursuing other interests so there a social network you to transition into when the time comes.
Taking these steps may lead you to some interesting and important conversations with your spouse/significant other, family members, and other shareholders/stakeholders. Chances are if it’s on your mind, it’s on theirs, too. The conversations may not always be easy; in fact, if they are easy, they’re likely not going deep enough. However, they open up opportunities for understanding what is important to you, to them, and what the future may hold as you head toward the next adventure in your life.
Next time you think about need to plan your next getaway, commit instead to planning your Big Vacation. It’s bound to be an adventure!
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