Did you know that it typically takes five to ten years to prepare a business for sale or transition? Most business owners think that planning their exit from the business is something that they can think about later. Some may have the idea that they will pass their business on to their children or perhaps a key employee. Others may think about selling the business to a third party or worst case scenario, just liquidating the business. All of these alternatives need a sufficient degree of planning in order for you to exit the business on your terms and with your retirement income secured.

1. Your Exit Strategy:
Plan or Procrastinate, The Future is
Yours
Linnea Blair, Advisors On Target
PDCA Contractor College Webinar
December 11, 2013

2. Learning Objectives
Critical questions you need to answer before you can
start the transition process
The most common options for exiting your business
Key considerations when selecting the best exit
strategy for you
Specific variables that will add value to your business
in preparation for sale
Essential estate planning considerations for family
businesses

3. Why owners choose not to plan
Procrastination
Fear of the unknown
Fear of losing the familiar

4. Critical questions you need to
answer before you can start the
transition process

5. Begin with the end in mind

6. What are your business goals?
Where do you see your business 3 years from now?
5 years from now?
10 years from now?
20 years from now?

7. What are your life goals?
Where do you see yourself 3 years from now?
5 years from now?
10 years from now?
20 years from now?

8. The Evolving Relationship
How do you see your relationship to your business
evolving in those time frames?
Fewer hours in the business
A different role
Transfer more responsibility to others
More vacations

9. Critical Questions
Do you want to exit the business fully or partially?
When do you want to leave the business?
How much money will you need when you exit the
business?

10. Options for Business Exit

11. Options for Business Exit
1.
2.
3.
4.
5.
Liquidation
Keep your business in the family
Sell to your employees
Sell to an outside buyer
Sell to another painting/home improvement
business
6. IPO – Initial Public Offering

12. Evolving Your Role
Several of the exit
options can involve a
gradual evolution of your
role in the company if it’s
your desire to stay in the
business to some degree
because you love it!

13. Choosing the best exit strategy
for YOU

14. What’s the best option for you?
Depends on your answers to the “critical questions”
Financial needs
Lifestyle desires
Family considerations
Availability of buyers

15. Choose your scenario
When do you want to leave the business?
Partially
Fully
How much money will you need when you leave?
Do you need a lump sum or an ongoing income?

16. Choose your successors
Who are your potential successors
Children
Employees
Management team of children and employees
What do you want to do for your successors?
What do you want to do for other children who are
not in the business?

17. Available Successors
Children
Do they want the business?
Can they operate it successfully?
Do you want to sell it to them or transfer it to them?
Employees
Do they want to buy the business?
Can they operate it successfully?
Will they stay with the business if you sell or transfer it to
someone else?
Are there other available buyers?

18. Is there a fit?
Does a transfer to your chosen successors allow you
to leave the business on your timetable?
Will this type of transfer give you the amount of
money you need to achieve your financial objectives
Are there other scenarios that would benefit yourself
and your family better?

19. Selling to an outside buyer

20. Tips for selling to an outside
buyer
Sell at the right time for the right reasons
Be clear about what you are selling
Determine what your business is actually worth
Make sure the business is in good order
Get professional help

21. Grooming your business for sale
or transfer

22. Grooming your business for sale
Determine your business value – Identify what you
will sell or transfer
Get rid of worthless inventory and long term debtors
Clean up your financial records
Strengthen legal and contractual affairs
Improve business systems
Prepare your management team

23. Variables that increase business
value*
Has regional/national accounting firm and reviewed/audited financials
Has processes and procedures in place w/routine operational audits
Has profitability at or above industry norms/uses a budget
Has depth of management. Brand. Can be absent from business for 2+ weeks.
Revenues have grown beyond increase in sales and at/above industry norms
Buy-sell, articles of incorporation, bylaws are up-to-date & regularly checked
Dominant player in market, diversification of clients and has growth plan
Has revenues of $10 million-plus and adjusted EBITDA of 10%+
Outside advisory board or respectable board of directors
Transition plan in place with measurable milestones
Business revenues and profits are consistent with years in business
* Provided by Carl Sheeler from Bizvalsltd.com

24. Variables that decrease business
value*
Performance is below industry norm and does not know what it is
No rhyme or reason for operating other than to have a job
Concentration is on keeping taxes low and shielding income
(kitchen sink)
Cannot be away from business. Is estimator-in-chief. No delegation.
No outside advice and retained advisors respond to issues. Not
proactive.
Documents are out-dated and/or do not reconcile
Level of compensation/financials are inconsistent with industry
norms
Allocation of capital is not based upon business fundamentals
* Provided by Carl Sheeler from Bizvalsltd.com

25. Estate Planning Considerations

26. Estate Planning Considerations
How can I provide for an equitable distribution of my estate
among my children?
Who should control and eventually own the family business?
How can I use my business to fuel the growth of my estate
outside of my business interests?
How do I provide for my family’s income needs, especially those
of my spouse and dependent children, after my death?
How can I help preserve my assets from the claims of creditors
during my lifetime and at my death?
How can I minimize estate taxes?

27. Exit Planning Advisory Team

28. Who do you need on your exit
planning advisory team?
Core Advisors
Accountant
Business Consultant and/or
Business Coach
Financial Planner
Insurance Broker
Estate Planning Attorney
Business Attorney
Additional Advisors
Business Valuation Expert
Exit Planning Advisor
Business Banker

29. Exit Planning Timeline

30. Exit Planning Time Line
Create a timeline for
where you and your
business need to be at
various points before you
plan to exit the business.
Put an action plan in place
to take the steps needed
to achieve it.

31. Not ready to plan your exit?
Think about these situations…

32. Voluntary or Involuntary Absence

33. Risk Mitigation
Life Insurance
Key Person Insurance
Buy-Sell Agreements
Wills/Trusts
Power of Attorney
Health Care Directive

34. Business Continuity
Strategy
Business Plan
Structure
Org Chart, Management Team, Job Descriptions, Clear
Responsibilities
Systems
Data Systems/CRM/IT/Backup
Financial Systems/Accounting/Payroll
Process Systems
Delegation
Employees, Outside Service Providers, Vendors

35. Conclusion
A successful exit plan takes time to implement
The business owner’s objectives for retirement and legacy
as well as personal and business resources need to be
considered
It’s important to maximize and protect business value
You’ll need to define and overcome barriers to exit
Defining continuity and contingency plans are key to
reducing risk
Personal wealth, estate and tax planning are important
parts of your exit strategy

36. Need help to grow a sustainable
business?
Business Coaching Services
On Target for Contractors Program
Individual Coaching
Executive Group Program
On Target Conferences
Contractor’s Blueprint - 10 Week Intensive – starts January 23, 2014
Business Model Boot Camp - 10 Week Intensive – starts January 2014
Group Coaching for Painting Contractors – starts January 2014
Business Plans
Business Health Check-up
Social Media Consulting
Find out more at AdvisorsOnTarget.com
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37. Contact and Connect!
Advisors On Target
Business Coaching & Marketing Consulting
Linnea Blair
Office: 619.291.3700
Email: Lblair@AdvisorsOnTarget.com
Web: AdvisorsOnTarget.com
Twitter: AdvisorOnTarget
Facebook: facebook.com/AdvisorsOnTarget
LinkedIn: linkedin.com/in/linneablair
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