The problem that sometimes occurs when working with a business owner who is considering exiting their business is the strong link between the owner and his business – that is the challenge that the owner has difficulty viewing their life after they exit the business and separate from the business.
There are several approaches to address this problem:
- Work with the owner to understand both the push and pull factors that are driving them towards considering exiting the business. This will help clarify the “why” and likely reveal a partial description of what life will look like after their exit.
- Work with the owner to write down a few paragraphs that describe what they will likely be doing after they exit.
- Go through the 8 exit options defined by The Exit Planning Institute with the owner and identify the top exit options that they are considering. This will help to understand their true motives for exiting. This will help highlight what is most important: Maximum payout? Taking care of their current employees? Maintaining the legacy? Some other motivation?
- Complete a basic wealth management analysis to determine if the business owner will have enough money to fund their planned lifestyle, including a reasonable estimate of the net proceeds they will receive from the sale of their business.
This process is one of discovery – trying to understand all of the exit drivers and all of the obstacles that might prevent an owner from selling, even in the face of a reasonable offer to purchase their business.