Steven started his manufacturing business 35 years ago. He began making a few items using injection molding techniques and enjoyed enough success that he began to add to his product mix. Over the years, he developed a sizable business, operating multiple manufacturing plants serving a variety of industries.
One day, Steven received an invitation to attend an educational program on the topic of business exit planning. Being in his late sixties, he had thought about the notion of having one or more of his children eventually take over the business, but they never really expressed interest in running a manufacturing company. Steven felt it was worth a couple hours of his time to learn a bit about exit planning. Maybe there could be steps he should be taking to prepare for the day when he would sell the company and retire?
Steven did attend the program and found the material very engaging. Clearly there was something to this idea of exit planning, although it wasn’t at all clear what steps he needed to take in his specific situation. Fortunately, at the end of the program, one of the presenters spoke to him and offered the opportunity to run through a short diagnostic process to understand actions he might need to take to become exit ready. That presenter (Aaron) sent him an email with a link to take an Exit Planning Checkup™, and Steven spent about fifteen minutes answering questions online to complete the evaluation. Aaron followed up with him later that day to schedule a meeting to discuss the results.
A few days later, Aaron met with Steven to discuss his Exit Planning Checkup™ results. Steven was surprised at the number of recommendations produced by the diagnostic and found it a bit overwhelming. The biggest take-away for Steven was that given his age and his thoughts of retiring in a few years, he had a lot to work on. He wished that he had learned about exit planning earlier and had gotten a head start on this important work.
One big concern Steven had was over the amount of time, energy and focus that would be needed to complete the exit planning process and develop an action plan to become exit ready. After all, Steven had his hands full running the company and had a hard time imagining how he could find time for this exit planning effort. Fortunately, Aaron offered an Exit Planning Program where he would facilitate the entire process. Realistically, Steven knew that was the only way it would ever get done.
The Exit Planning Program took a couple months to complete. The process began with a business valuation performed by a valuation professional Aaron introduced to Steven. When the valuation results came back, Steven was surprised the value was substantially lower than expected. Steven was counting on receiving more for the business and didn’t relish the thought of cutting back on the retirement plans and lifestyle he and his wife had envisioned together.
To address that value gap, Aaron included a host of additional diagnostic tools to learn where improvements needed to be made to make the business run smoother, reduce risk, and make the company more attractive and more valuable to a potential buyer. That Business Wellness Diagnostic Series™ was a huge time saver, and exposed business issues Steven hadn’t even considered. Steven was also extremely impressed at how Aaron would bring in specialists to discuss the results of each diagnostic. In addition, Aaron arranged meetings with an Investment Banker, an M&A Attorney, a Wealth Planner, and other specialists from his local Exit Planning Exchange chapter. While Steven remained concerned about all the moving parts involved in getting truly exit-ready, he was confident that Aaron had brought together a collection of advisors who could answer any questions and guide him through the years that lie ahead.
At the end of the Exit Planning Program, Steven had a prioritized Value Growth Action Plan in place to undertake the changes needed to improve the amount and the predictability of profit and cash flow coming from the business and achieve the value he needed to fund his retirement plans. Many of the experts Aaron had brought into the planning program would be there to help successfully implement the Action Plan. The effort would take several years to complete, and Steven still wished he had started this journey years earlier.
When the time came to put the company on the market, Steven was overjoyed. He got the value he needed for the company, several million dollars more than he would have if he hadn’t executed the Action Plan Aaron and his team of advisors helped design and implement.
Thinking back on his experience with the Exit Planning Program, Steven knew how fortunate it was that he attended that exit planning educational program all those years ago. That Exit Planning Program turned out to be the best investment he ever made!
—————————
Disclaimer: The scenarios and characters depicted in this article are fictionalized and intended solely for illustrative purposes. While inspired by real-world consulting experiences, they represent a composite of various engagements and do not reflect any specific individual, organization, or event. Any resemblance to actual persons, living or deceased, or to actual companies or institutions is purely coincidental.
The Exit Planning Checkup™ and the Business Wellness Diagnostic Series™ are trademarks of EvaluSys LLC, Charlotte, NC USA. See EvaluSys.com for more information.