WHAT IS EXIT PLANNING? THE EVOLUTION OF THE DEFINITION

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May 28, 2018 at 12:00 AM
by Dunnington Consulting

Following is an excerpt from content from Scott Snider:

One of the biggest hurdles any exit planning advisor faces…what is exit planning?

Over the past 25 years, the definition has certainly evolved as exit planners investigated for themselves the same paradigm shift.

What is Exit Planning? One widely accepted definition: An exit plan asks and answers all of the business, person, financial, legal and tax questions involved in transitioning a privately owned business. It includes contingencies for illness, burnout, divorce and death. Its purpose is to maximize value of the business at the time of exit, minimize taxes, and ensure the owner is able to accomplish all of his or her personal and financial goals in the process.

This definition is actually 99% right. But, what’s missing? In the last sentence it states; its purpose is to maximize value of the business at the time of exit. Is that true?

Exit planning is simply good business strategy. It does not exclusively serve the owner and the business at “time of exit.” In fact, exit planning is value building and the value of the business is living and breathing. Meaning, our role as exit planners is to help that owner maximize value today. Not just at the time of exit. Whether you’re a 30-year-old owner or a 70-year-old owner. Whether you are a startup business or a mature company. Bringing exit planning into the present allows you to build value today which will drive positive outcomes for owner tomorrow and certainly at the time of exit.

Good exit planning is when the business has been positioned with such a level of owner independence and transferable value that the timing of the exit becomes irrelevant.

Credits

What’s your definition of exit planning? Share your thoughts with us by reaching out to Scott Snider at SSnider@Exit-Planning-Institute.org.

The management consultants at Dunnington Consulting can help determine the value of your business, or refer you to other business consultants for affordable exit planning.

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