Exit Strategy and Succession Planning
How To Evaluate Your Time Frame
By Robert Gellman
In the fall of 2006, they agreed it was time to retire. The
key to their retirement plan would be their ability to sell th...
As a final measure, John and LuAnn have integrated their
forecasts into their business plan. Now they pursue their
plannin...
© Copyright 2009 CBIZ, Inc. All Rights Reserved.
Bob Gellman has advised business owners in matters involving wealth creat...
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Exit Strategy & Succession Planning - How to Evaluate Your Time Frame

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This whitepaper discusses how to evaluate your time frame when it comes to exit strategy and succession planning.

For more information please contact the author, Bob Gellman at bgellman@cbiz.com or visit www.cbiz.com

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Exit Strategy & Succession Planning - How to Evaluate Your Time Frame

  1. 1. Exit Strategy and Succession Planning How To Evaluate Your Time Frame By Robert Gellman
  2. 2. In the fall of 2006, they agreed it was time to retire. The key to their retirement plan would be their ability to sell the business for the sort of values they were hearing it was worth. Unfortunately, while this seemed like a very good time to sell, the housing construction boom was at an end. It became clear that the business was not going to sell at their target price due to the rapidly declining market. Much to their disappointment, John and LuAnn had no choice but to put their plans on hold and weather the economic storm. Now is the time to incorporate exit strategy into your business decisions. Evaluating your exit timing has as much to do with the business environment as it does with your personal sense of timing. Consider the story of John and LuAnn, successful owners of a production housing construction firm. In 2005 they experienced their most successful year in the company’s history. While they believed their success afforded the many luxuries, the one luxury they didn’t have was the free time to enjoy the things they loved most. Page | 1 Exit Strategy and Succession Planning
  3. 3. As a final measure, John and LuAnn have integrated their forecasts into their business plan. Now they pursue their planning objectives with an eye toward the timeframes in which they know their objectives need to be accomplished. To evaluate their next window of opportunity, John and LuAnne have developed a plan to monitor the economic cycles their business is exposed to. They now prepare a quarterly economic dashboard that portrays national, regional and local trends as well as internal business metrics. Their economic scorecard includes trend lines that allow them to anticipate the direction and timing of the upcoming economic climate. The key to their analysis is the identification of leading economic indicators that allow them to forecast trends. They also decided that the interest rate yield curve is particularly useful as their business is highly dependent on the current and longer- term interest rate environment. The bright side to this story is that now John and LuAnn know that the best time to sell their business will be as economic conditions are solidly in an uptrend. Given their experience, they also know that they need to leave plenty of time in the business cycle to allow for unpredictable events, post- transaction earn out possibilities and plenty of blue sky for the buyer to relish. Page | 2 Exit Strategy and Succession Planning
  4. 4. © Copyright 2009 CBIZ, Inc. All Rights Reserved. Bob Gellman has advised business owners in matters involving wealth creation and asset protection for over 20 years. As a shareholder of two companies and Chief Operating Officer of the firm’s wealth management practice, Bob’s experience includes his participation in his firm’s succession strategy as it merged with CBIZ, Inc. in 2005. Bob’s experiences led him to author the book, The Seven Keys to Unlocking the Door to Your Dreams: Exit Strategies for Business Owners, which establishes the foundation for his workshop of the same name. Bob continues his practice with CBIZ MHM, LLC as a CPA, Director of Tax Services and AICPA Personal Financial Specialist. About the Author So, now; How prepared are you to anticipate the time frames most important you, your family and your business? Consider these questions: - Which business and economic cycles is your business exposed to? - What are the leading indicators you could monitor to foresee those cycles impacting your company? - Where is your industry and company relative to the overall business cycle and other cycles that it is exposed to? - How long until your next window of opportunity to maximize the value of your company in a sale or ownership transition? Bob Gellman CBIZ MHM, LL. (858)795-2110 bgellman@cbiz.com Page | 3 Exit Strategy and Succession Planning

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