Exit Planning Presentation for Privately Held Business Owners- 9/22/17- To Westlake Sunrise Rotary Club

1. Westlake Sunrise Rotary Club
Sept. 22, 2017
Jim Wisdom, CFP
Finish Big
How To Successfully
Exit Your Business

2. “I don’t predict the future.
I look at what has
happened already and
point out the inevitable
result.”
- Peter Drucker
“The Father of Modern Management”

3. Overview
• What is Exit Planning?
• Why is it important?
• Headwinds Facing the Business Owner
• Characteristics: Successful / Unsuccessful
Exit
• Case Studies - Finish Big
• Key Conclusions to “Finish Big”
• Q&A

4. Research
• My experience with Business Owners (2003-2017)
• “Finish Big”- by Bo Burlingham
• “Exit Planning: The Definitive Guide”- by John Brown
• “Your Exit Map - Navigating the Boomer Bust”
– By John F. Dini

5. What Is Exit Planning?

6. Why Is Exit Planning Important?

7. Types of Business Exits
• Voluntary
• Sale To Family
Member
• Sale To Key
Employee(s)
• Sale to third party
• Sale to competitor
• Liquidate the business
• ESOP
• Involuntary
• Death
• Disability
• Incapacity

8. Headwinds For The Business Owner
Headwind No. 1
The Baby Boomer Tsunami

9. The Baby Boom Begins!
Birth Rate (1945-1957)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
45 46 47 54 57
Newborns
Newborns

10. Baby Boomer Tsunami ( cont’d.)
• “…The Baby Boomer BO’s face a challenge like
none other. Just as they have done everything
else together, the Baby Boomers are all going to
sell their companies at the same time.” - John F.
Dini
• “This kind of movement could result in a glut of
companies on the market, driving down
valuations and giving new leverage to buyers.” -
John Brown

11. Headwind No. 2
Boomer Sellers and Gen X Buyers
• Boomers
• Born 1945-1964
• 78 Million Boomers
• “Live to work”
• Work long hours
• Work regular business
hours
• Work at the office
• Accept risk/reward of
business ownership
• Gen X
• Born 1965-1980
• 69 Million Gen X’ers (-
11%)
• “Work to live”
• Work normal hours
• Work flex hours
• Telecommute
• Many reject the burden of
business ownership

12. Headwind No. 3
Entitlement Programs
• Medicare
• Medicaid
• Social Security

13. US DEBT
$20 Trillion!

14. Headwind No. 4
Longevity

15. Headwind No. 5
Health Care Costs

16. Good and Bad Variables
GOOD BAD

17. Case Studies From Finish Big
• Norm Brodsky – (Citi Storage) The Offer
• Ray Pagano - Videolarm
• Bill Niman - Niman Ranch

18. Norm Brodsky (Citi Storage)
The Offer

19. Ray Pagano - Videolarm

20. Bill Niman - Niman Ranch

21. How Much Time Do You Need
To Exit?

22. Elements Of A Successful Exit
From Finish Big

23. Elements Of An
Unsuccessful Exit

24. Preparing For A Successful Exit
8 Common Characteristics
• BO’s knew who they were, what they wanted out
of business, and why
• BO’s learned to look at their businesses through the
eyes of the buyer
• They built in plenty of time ( years) and options so
they (or heirs) could avoid a forced sale situation

25. 8 Common Characteristics, cont’d.
• A well thought out succession plan ( where
applicable)
• They had the right kind of help ( Advisors, and input
from BO’s who had exited before )
• BO’s had come to terms with responsibilities to
employees and investors

26. • BO’s understood who they were selling to and what
motivated the buyers
• BO’s had a clear vision of what they would do after
the sale
8 Common Characteristics, cont’d.

27. Key Conclusions
Finish Big
• Not the $- although that’s part of it
• It has to do with service
• Each successful exit included BO’s helping
other BO’s to succeed in business

28. • Service may have been a key factor in starting
one’s business
• BO’s serve customers, employees and
communities
– This is often what’s missing during the
transition phase for BO’s
Key Conclusions, cont’d.

29. • “Of all the lessons that can be drawn from…this
book, I believe this (service) is the most important
one.
• “…The stories remind us that a business is not only
an economic organization, but also a social one,
giving purpose and meaning to our lives and
providing the camaraderie, direction and fulfillment
most of us feel a compelling need for.”
Key Conclusions, cont’d.

30. “…The bigger challenge ( other than the $) is to figure
out, in advance if possible, what will take the place of
those other important needs that your company has
filled…”
“ If you can manage, as they have, to use your new
wealth as a stepping stone to an even higher calling,
you can truly be said to have finished big.”
Key Conclusions, cont’d.

31. Thank You!
Q&A