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Value Creation Blog

Exit Planning Is A Process And Not A Destination

Posted by Josh Patrick

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I often ask myself if exit planning is a profession.  There is a group of people who are trying to make the business of writing an exit plan a profession.  I think they miss the mark.  Writing an exit plan should not be a profession, but exit planning should.

I’ve written several entries on why I think exit plans make little or no sense for most business owners.  I do believe that exit planning is an important activity and one that decidedly should have a profession, although not certified (I think there are way to many certification programs in the country that don’t mean anything to consumers).

An exit plan is not a destination - it’s a process.  The process of moving towards transitioning out of your business is a long and winding road.  It’s one where you need to have flexibility and understand what the options are for you.  It doesn’t mean you need to understand or even know about all of the options that business owners use.

The choices that most business owners have are relatively limited.  There are many ways people leave their business.  For most, even though there are over a dozen different ways of leaving your business, will only have two or three that make any sense.  It’s understanding those two or three that are important and this is why having a competent exit planner working with you can help.

I’ve observed that many new exit planners want to show their clients that they know all of the different methods of business transition.  My clients and I seem to have no interest in learning about what they can’t use, they are interested in what they can use and what has to be done before they leave their business.

The actual exit for a business owner is something that will often happen relatively quickly.  What takes a long time is the preparation or value building part of the process.  It’s rare that I see a business and or it’s owner who are ready to leave their business when we start working together.  Most often we have to do some very specific activities to make the business more valuable and help prepare the owner for what’s next in their life.

It’s the process of getting a business owner ready for a transition that’s important.  It’s the rare owner who wakes up one day, decides to sell their business, and successfully move on.  For most they will have to first make their company operationally excellent before they can even think about a business transfer.  For many owners this will take years.

If the owner wants to create true enterprise value it’s not only operational excellence that’s needed but strategic excellence as well.  Having a business become strategically excellence has several steps that usually take even more years to accomplish.  Achieving both strategic and operational excellence is where the road winds.  I’ve rarely seen the actual outcome be the one we thought it would be when a client and I start down this road. 

I’ve come to believe the process is what really counts not the destination.  Following a solid process can help lead to a positive outcome.  For most this is what we want all along.

Josh Patrick

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Topics: operationally irrelevant, for business owners, exit planning, business exit planning, passive ownership, exit readiness

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