You can not believe it! You decide to sell your business and the next day it seems that half the city knows you are trying to sell. What affect will that information have on your employees, vendors competitors and customers?

This is a real concern once you decide to sell. The next thing you know is that everyone in the free world knows their intentions. How does that happen and how can it be prevented?

In order to make the best possible decisions for your family, your company, and yourself, you must talk about your plans to sell with informed and experienced professionals. You need factual information about how the exit planning and sale or transfer processes work. You need expert guidance about whether your company is poised to command top dollar and information about market conditions for sales in your industries. And finally, you need help sorting through all of the emotional issues that surround the departure from your companies.

Experienced transaction advisors (attorneys, business brokers or investment bankers) provide the input you need on a confidential basis. Nothing that you discusses with the transaction advisor leaves the room without your express consent.

Information leaks seldom originate with your advisory team. They know the importance of confidentiality. They understand that a breach of confidentiality on their part will affect not just your business, but their reputations in the community.

The confidentiality problem then does not lie with your advisors. How then do you maintain confidentiality once the information-gathering process ends and the sale process begins?

A transaction intermediary (Business Broker or Investment Banker) will contact interested buyers and disseminate information about your company to parties known and unknown. They will safeguard your confidentiality, screen the potential buyer list and remove competitors or companies with whom you do business. Initial marketing efforts to potential purchasers do not identify your business by name. Finally, qualified buyers (of your un-named company) must sign a strong and binding confidentiality agreements before learning the identity of your business or any confidential information.

All of these safeguards are in place to protect you, the owner, from the consequences mentioned above: nervous customers, jumpy employees and opportunistic competitors. All the scrupulously maintained barriers in the world, however, cannot shield an owner from the most dangerous threat to confidentiality—the owner’s own mouth. In the few cases when confidentiality is breached, the leak generally originates with the owner. He or she just couldn’t maintain silence until the deal closed.

Let that be a warning to the loose-lipped. But let it also reassure the vast majority of owners: if you can control your own conversations, you can control the confidentiality of the entire sale process.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

Ultimately, your ability to get top dollar for your company may depend on your ability to create an employee incentive plan that will motivate and keep good management. An important characteristic of any successful incentive plan is that key employees earn the incentive bonus based on a performance standard that, when attained, increases the value of your business.

Pay careful attention to the design—and consequences—of the performance standard. Consider the following:

• A performance criterion can be any standard that you dream up because incentive plans are “nonqualified,” (they carry no special benefits under the U.S. Tax Code) and therefore can be restricted to management.
• The performance standard, when met, must measurably increase business value. Because the goal is to provide more cash to you when you leave via the conversion of that increased value to cash, many owners decide to measure value in terms of increasing cash flow. In addition, buyers (especially those of service companies) typically use valuation formulas based upon a multiple of cash flow. Performance standards based on increasing cash flow are attractive to both key employees and owners.
• When you determine how best to measure cash flow for purposes of an incentive plan, start with the amount of cash the company generates and pays to you in the form of salary, bonus, distributions, and excess rent. Add to that the cash flow amount retained in the company that could be distributed to you, but that you elect to keep in the company for growth and capitalization. More or less, that sum is the available cash flow stream that should increase as the efforts of your management increase business value. This formula can put more money in your pocket today and on the day you sell.

Here are a few examples of formulas that work equally well for stock (equity) or cash-based plans.

• Key Employees earn a percentage above a base cash flow amount (perhaps 30 percent of cash flow over $100,000). If cash flow falls below the base of $100,000, bonuses are not earned. The base amount can reflect last year’s cash flow or the amount retained in business for capitalization purposes or a reasonable return on the assets of the company (cash flow the management team did nothing to create). Incentives can be paid in stock or cash and deferred until a specific date.
• The incentive amount can be a percentage above a base amount (as in the example above), except that it is a percentage of cash flow that adjusts as cash flow increases or decreases.
• The incentive can be a percentage of growth in adjusted revenues of the company, or perhaps of adjusted revenues above a certain base level. For example, gross revenue less the Cost Of Goods Sold (COGS) is the “top-line” reduced by a base amount, with Key Employees receiving a percentage of the amount above that base level.
• Some incentive formulas reflect the desired financial/cash flow condition of the company. If the goal is attained in a specific year, the Key Employees are allowed to buy a portion of the company—usually paid for with the future cash flows from the stock just purchased. For example, if revenues, (or revenues adjusted for COGS), or cash flow reach a base level of $X (described in the incentive agreement), eligible Key Employees are entitled to purchase a pre-determined percent of the outstanding stock of the company.

These are just a few of the many formulas you can use to effectively motivate your key employees to increase the cash flow, the financial strength, and ultimately the value of your business. An experienced planning team should be able to help you design a formula that works best for you, your employees and your company.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

One constant of successful companies is a stable, motivated management team. This quality not only contributes to corporate success, it is also key to increasing the value of your business and your successful business exit.

Should you decide to sell your business to a third party, you’ll discover that potential buyers place significant value on the strength of your management team—if that management team can be expected to remain after you have left the business. Similarly, if you contemplate selling the business to family or employees, the likelihood of being paid for the business after you’ve left can be entirely dependent on the strength of your remaining management team.

In short, capable management remaining with the company can be the key to getting top dollar for your business. Without such management your exit may be more difficult.

One of the many factors involved in creating, motivating and keeping good management is the creation of a properly designed incentive plan for key employees. To be successful, an incentive plan must motivate the management team to increase the value of your company in a measurable way. Only by increasing company value do employees receive the incentive (ownership or cash).

Successful plans share four basic elements:

First, the plan is specific. Employees know, in advance and in writing, what standards need to be met to receive the incentive.

Second, the incentive is substantial. This substantial amount is only earned and paid upon the attainment of a performance standard that you set.

Third, the plan handcuffs management to the business. Employees are motivated to stay with the company in the short term as well as (and more importantly) after you’ve left it.

Fourth, the key employee earns the incentive bonus based on a performance standard, that, when attained, increases the value of your business.

This fourth element is critical to a properly designed incentive plan.

Management incentive plans are based upon the assumption that the plan provides incentive. What is often less clear is exactly what the incentive motivates the employee to do. Effective incentive plans motivate employees to act in ways that increase your business value. Remember, your ultimate goal is to build enterprise value that you will someday convert to cash.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

Myth: “My CPA will tell me when it is time to start planning for my business transition.” (Replace CPA with “attorney,” “financial planner,” or “insurance professional” and the myth remains intact.)

Fact: Your advisors, be they CPA’s, attorneys, Financial or Insurance Professionals, may not initiate planning discussions primarily because you have not told them you are interested in leaving your business. Other reasons include:

• Your advisors may or may not have the experience necessary to guide you to a successful exit. As a result, they may not think to ask you of your plans.
• Your legal and accounting advisors may focus their attention on compliance-type activities (Directors’ Minutes, an employee problem, tax returns, etc.) and may not “see the forest for the trees.” They solve specific problems or issues that clients bring to their attention. Many are simply not planning oriented. Similarly, financial and insurance professionals often focus on a smaller subset of overall planning—perhaps investment planning or life insurance planning to help meet income needs or estate tax costs.
• No single profession possesses all of the skills and experience necessary to single-handedly lead an owner through the ownership transition process. Additionally, some professionals are not comfortable cooperating closely with professionals from other disciplines for the benefit of their common clients. The result can be that the process stalls before it really gets started.

Having said that, there are, of course, many advisors who are exceptions to these generalizations. The person sending you this newsletter may be one of them.

It is dangerous to wait for others to take the first step. You need to take the initiative, but how?

Ask your current advisors about their experience planning successful exits. Ask them what advisors they work with to help facilitate, design and implement business transition strategies.

Read and learn. Don’t assume that advisors will alert you when the time is ripe to begin your planning. Take the initiative—as you do when you read this newsletter—to prepare for your own exit from your business.

Ask other professionals for suggestions. Your CPA, attorney and financial and insurance advisor aren’t the only ones equipped to help you. Lawyers and CPAs are not the sole sources of ideas regarding planning and tax ideas. Your banker, business consultant, business broker, investment banker or valuation specialist may provide you with important exit planning information. No matter which advisor you speak to, emphasize your desire for confidentiality as you work through the exit planning process. Even though planning for a successful exit should be at the top of every owner’s agenda, the word “exit” can give employees, vendors and customers the wrong impression. Don’t be afraid to ask any professional—especially those you have not retained in the past—to sign confidentiality agreements before you share information about your company.

Planning for an owner’s exit is, at its core, a multi-disciplinary approach. It is simply too difficult for one professional to do it all. Further, some professionals may lack the training and/or the temperament to involve professional from other disciplines when they first begin to represent a client. For these reasons, many advisors mistakenly assume that Exit Planning is the responsibility or practice area of some other professional. Understandable as all of these obstacles to action are, they can impede the owner who is ready to begin the exit planning process.

The bottom line is: accepting a myth as reality can be dangerous. It may be up to you—not your advisors—to initiate the first step. After all, it is your business.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

In today’s Merger and Acquisition marketplace, an all-cash buyer is as rare as a balanced federal budget. Those buyers who do arrive at the closing table with cash in hand may not be over-burdened with huge bagfuls.

Almost as uncommon as the all-cash buyer is the offer of a valuation multiple that approaches (much less matches) the multiples of the late 1990s.

Let’s look at another hypothetical example: Casey Green, the owner of a custom publishing company. He carefully made the decision to sell and, through the efforts of an effective business broker, found a buyer who was prepared to offer Casey the purchase price Casey felt he needed and deserved. There was only one problem. The buyer’s offer was not all cash; it was not even predominantly cash.

Like Casey, what today’s would-be sellers of great businesses are seeing are buyers offering attractive purchase prices to be paid in currencies other than cash.

Instead, today’s typical $5 million transaction (the purchase price of Casey’s company) might be paid $1 to $1.5 million in cash, one-quarter as a seller carry-back promissory note (generally unsecured) and the balance as an “earn-out.” Also, sellers are often required to retain a portion (10 to 25 percent) of the business that they have just sold.

If we assume that Casey’s company has earnings before interest, taxes, deprecation and amortization (EBITDA) of at least $1 million, the $1.5 million cash payment represents less than two years’ cash flow. The balance is paid only if the company (that Casey no longer controls) performs well under new ownership and, perhaps, under new management.

Rather than grabbing the highest bidder by the throat, a better approach begins with determining what cash amount you want and what you need in order for a sale to proceed. Once you determine that amount, it becomes your focus. Remember, the cash amount may be the only “sure thing” in the transaction. Should cash flow falter, earn-outs and promissory notes may evaporate (or become subject to litigation).

Casey, like many owners, was not in a position in which he had to sell his business. Although the purchase price offered to him was acceptable, the terms were not. It made little sense to Casey to sell if that sale left him dependent on the future performance of the company for the majority of the purchase price.

Casey learned two important lessons. The first was that his transaction intermediary (business broker) naturally sought the highest bid. His broker’s commission was based, after all, on the total transaction value, not just on the cash portion.

The second lesson was that instead of focusing on what his business was worth, Casey needed to pay close attention to how much cash (or other not-at-risk-assets) he needed to achieve his financial goals. By doing so, Casey avoided the road that too many sellers go down: selling to the highest, but often not the best, bidder.

Casey understood that he had but one shot at achieving his financial goals. He intended to sell his business for an amount of cash that would assure his financial goals are met. Casey was not averse to receiving additional money, but he was focused on getting what he needed—in cash—rather than on a promise of much more.

Today’s moral: Analyze any purchase price in terms of satisfying your Exit Objectives. Are your financial goals best satisfied by an earn-out, a promissory note or by cash?

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

So, you have decided to become a seller. You have determined that even though market conditions are not absolutely ideal, your company is saleable.

This scenario is reminiscent of a little boy who cried “Wolf!” In our context, the story usually begins when a buyer approaches you (unexpectedly) expressing an interest in acquiring your company. Without adequate preparation, you proceed with negotiations to sell your business. Typically, the business is unprepared for the marketing process. In addition, you have certainly not had time to properly analyze who to approach and how best to approach potential buyers.

Instead, you go after the “low hanging fruit”—the single buyer who has approached you. In this case, you are not putting your best foot forward. In preparing for a sale, your “best foot” involves:
1) preparing your company for sale,
2) creating a thorough, professional confidential offering memorandum,
3) exposing the company to all interested buyers simultaneously (which has the potential of creating a buying frenzy) and
4) recruiting experts to play on your team—experts that the buyer is already using.

An effective and lucrative way to sell a business is to present it, in its best possible light, to all qualified buyers simultaneously, providing each with identical information. This information includes the certain knowledge that their competitors are also looking at your business.

It is highly unproductive to talk to prospective buyers before you and your business are prepared to talk to all qualified buyers. Are you willing to sell your business for less than its full value? By going into the market unprepared, you undermine your ability to do so.

Buyers are a fickle (or perhaps wary) group. They may not want to look again at a business they have already rejected. They justifiably wonder: Why is seller coming back? Is something wrong, seriously wrong, with the business? Has it suffered setbacks?

Buyers of businesses are like car buyers. Would you go back to an automobile dealership to look at the same car you decided was too expensive or did not fit your tastes the day before? Not likely. The only thing that will bring you back into the showroom is a significant price reduction.

The solution is obvious. Do not taint the marketplace. The temptation to talk to a potential buyer may be difficult to resist but you must keep the big picture in mind. If you decide what you want and need in order to sell your business before embarking upon a sale, you can help to avoid this mistake. Do not begin the sale process in a half-hearted manner, feeling your way along. By doing so, you may forfeit your best opportunity.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we are all wet? Post your experiences or examples.

So what if you’ve never sold a business before? You know what you want from the sale of yours. You know your business better than anyone else. Who better to lead the charge than you?

Don’t mislead yourself. You may be the worst possible person to sell your company.

Why? You may be the person most attached emotionally to your business. You may find it difficult, if not impossible, to negotiate in a detached, dispassionate and effective manner with a prospective buyer.

Make no mistake: most, if not all, sale negotiations, at some point get intense. Deals have more ups and downs than carnival roller coasters. There are twists and turns. Experienced guides can anticipate and deal with these inevitable twists. Few owners have the stomach to endure them without assistance.

Even if your endurance for roller coasters is high, can you ride while doing everything it takes to keep your business profitable? It is the rare owner indeed that can keep his or her company at peak performance while negotiating the intricacies of a sale. If there was ever a time to stay focused on your company, the negotiation period is it. Any drop in productivity, sales, or income can be subject to the buyer’s scrutiny and can scuttle even the best deal.

If you need another reason to remove yourself from playing the lead role in sale negotiations, keep in mind that once negotiations end, you are the only member of your negotiating team that will likely have to work with the buyer after closing. The more crucial you are to the success of the company, the more likely it is that a buyer will require your continued services after the sale. For that reason, many sellers understand that it may be in their long-term interest to assume a less visible (and thus less adversarial) role during the sale process.

You will find the assistance of a good transaction intermediary — business broker or investment banker — to be valuable in assessing the marketability of your company, in accurately pricing and valuing your company, in locating qualified buyers and in negotiating and closing the deal. The right transaction intermediary can help to bring value to the table. By conducting a Controlled Auction and employing their negotiating skills and experience, you could receive more money on better terms than you could have alone.

For all of these reasons, put your energy into selecting the best possible Advisor Team rather than into going it alone. Use advisors who have navigated these waters and communicate your objectives to them clearly. Determine the level of communication that you require and trust their experience. While you may depend on others to navigate, you are still the captain of the ship.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

When time comes to tell your banker you’re planning to exit your business, or when you need money you may experience feelings ranging from mild anxiety to outright panic. Why? We’ve been conditioned to believe that bankers say “no” far more often than they say “yes.” That may or may not be true but bankers make money by saying yes.

While bankers may be cautious by nature, they do need to make money. In fact, like all other business people, bankers are eager to continue profitable relationships. If the sale or transfer of your business is unlikely to disturb that profitable relationship, your banker is vested in helping you execute that transfer. It should come as no surprise that banks value the profitable relationship even if you personally are not part of it.

Two Sale Scenarios
In a cash sale to a third party, your banker is an excellent source of financing for your buyer. If loans are hard to come by, you may wish to help out the buyer by introducing him/her to your banker. Be sure the buyer has at least these attributes:

• A “normal” amount of assets (either personal to the buyer or to be acquired in the transaction) that the bank can use as collateral;
• Good credit;
• Management experience in creating cash flow; and
• A down payment — usually of at least 20 percent.
• Of course, your business should have a solid cash flow history.

As always, banks will likely apply certain restrictions and additional qualifications to your buyer. The point is that banks want to make money. They do so by maintaining existing, profitable relationships through business transitions, including providing the funding necessary to make those transitions possible.

In the second scenario, you are transferring your company to insiders (children or employees) or to an outsider with little cash. These parties may not have much money so there’s a real need to recruit your banker for your team.

Minimizing Risk
In all scenarios, banks strive to minimize their risk. One way to do so is for buyers to take advantage of the Small Business Administration’s loan guarantee programs that can protect the lender bank against loss in case of default. The SBA’s 7A program is designed to facilitate the sale of a business interest by guaranteeing the loan repayment.

Conclusion
Develop and use your banking relationship. It can be a valuable tool as you begin to plan and implement your. Consider taking your bankers to lunch to explore how they can help you reach your exit objectives. If they accept your invitation, their input will be well worth the cost of the meal.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offer you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

The necessity of having a trained and motivated management team in place before and after you leave the company cannot be overstated. In the eyes of a buyer, a business has little value if its owner’s departure means the new owner must reinvent the wheel. So it is with systems. Once you are gone, can the new owners rely on systems to make your success repeatable and sustainable?

Case Study
Dawn and Preston Slater, owners of a machine shop with $7 million in annual revenue, sat down and announced, “We have decided to leave the business as soon as possible. We’ve got our management team in place and want to execute a transfer of the entire business in the next six to 24 months. It has been a great run but we are burned out. What do we do next?”

As Dawn talked, she revealed that Preston was the only one who knew how to set up and program the company’s manufacturing process to efficiently produce the customers’ orders. In addition, he was the only one who knew how to design the products their customers demanded. In short, there was a treasure trove of knowledge firmly lodged between Preston’s two ears.

Preston and Dawn did indeed have key employees in charge of marketing and sales, personnel and the plant but they did not have a management team. There were three very important functions: product design, set up and programming of the manufacturing equipment and equipment maintenance, that only Preston could perform. Without converting these functions to systems, however, Preston and Dawn did not have a key Value Driver in place — one that would make their company more valuable to a buyer and more readily saleable.

What is a system?
A business system is a repeatable process that employees understand and use to achieve a desired purpose. Owners implement human resource, marketing, organizational, administrative, financial, accounting, lead generation, and sales systems.

Michael E. Gerber, has written extensively about systems in his book, The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It. He suggests that there are nine elements of a successful system. Theoretically, that may be true but for our purposes, we can limit our discussion to four prime characteristics:

• The system must have a clear purpose. What is the desired result of the system? In Preston’s case, he needed three systems: new product design, machine set up and machine maintenance.
• The system must be accountable. Who is responsible for executing each step of the system, at a determined time, in order for the system to accomplish its goal? How will you objectively measure the success of the system? Preston needed to designate the positions in the company that would be responsible for executing the three new systems as well as how he would measure how successfully each system was implemented.
• The system must be documented. If the system isn’t written down, it may or may not exist in the mind of employees and could be an endless variety of interpretations. If a system isn’t described in writing, employees can’t be expected to follow it and a potential buyer can’t know that it truly exists. While Preston was tempted to conduct a quick, one-time training session and consider his job done, he needed to create manuals that described in detail what decisions went into his designs, how he set up the equipment to facilitate those designs and how to maintain the equipment on a regular and on an as-needed basis.
• The system must be repeatable. If your systems only work if you are there to execute them, they do not meet the standard of “repeatable.” If you feel you can’t delegate your role in a particular system, that system is not repeatable. Your systems may be dependent on a particular position but they must be independent of any particular person to be easily repeatable. Again, Preston had to do more than simply train one employee to do his job. He had to figure out a way to make the tasks that only he had performed in the past, easily repeatable by others in the future. In doing so, he could replace himself with systems that others could use to replicate his expertise.

Creating Systems
How does the busy owner create a system? There are a number of books (including the book referred to above) and experienced business consultants that can help you to design successful systems. As you read these books and retain these consultants, however, remember your goal: systems create value. Value is a key element in the successful exit from your business.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offers you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

Fictional owner, Peter Miller, had called his accountant to ask her to help him value his business with the idea of retiring in a few years. No stranger to Exit Planning, his accountant assembled all of Peter’s advisors and launched a complete Exit Planning process. She began, not with an examination of how a transfer of ownership might work, but by having Peter answer the first three Exit Planning Questions:

• When do you want to leave your business?
• How much money do you need when you leave your company?
• To whom do you want to transfer your company?

Peter’s Advisor Team (if properly trained and experienced in Exit Planning) could help to save him time, money, and grief. A typical Advisor Team usually consists of: an accountant, lawyer, financial advisor or insurance professional, and oftentimes, a business consultant, valuation specialist and some sort of transaction specialist (business broker or investment banker). Given this extensive list of professionals, how can assembling and using such a Team help save an owner either money or time? A natural question most owners ask is, “How much is all of this going to cost me?”

The answer is very simple. A well-trained Advisor Team should make you money, not cost you money. This is not to suggest that your attorney or accountant, for example, is going to pay you money or that you aren’t going to end up paying for their services. But, compared to little or no planning, a carefully planned and implemented Exit Plan can result in income, gift and estate tax savings as well as a reduction in the risk of non-payment from the buyer.

Tax Savings
A correctly-designed Exit Plan yields the owner possible income, gift and estate tax savings. Finding those savings opportunities, however, is the work of more than one advisor. If Dennis wants to exploit the available tax savings, each of his advisors must contribute expertise from his or her particular discipline. Working together in a coordinated fashion not only saves everyone time, prevents the chances of duplication and the possibility of overlooking important elements, it is the most efficient way to locate and exploit various tax saving opportunities.

Reduction of Risk
In addition to helping to reduce your taxes, an experienced Exit Planning Advisor Team can help minimize the tax impact on the buyer. Why does an owner care about a prospective buyer’s tax savings? Remember that the more money a buyer saves in taxes, the more money he has to pay you your purchase price. Minimizing taxes, drafting airtight contracts (or promissory notes) and negotiating favorable deal terms all serve to help reduce the risk of not receiving full payment.

Cost Efficient
As noted above, when professionals work together as a team, everyone saves time and there is less chance for unnecessary (and expensive) duplication. In addition, many owners designate the professional who can perform most cost-effectively to coordinate the activities of the various advisors. Today’s financial, legal and tax complexities demand that owners use multiple professionals to get the best possible result.

Additional Benefits
Some Exit Planning Advisor Teams include a business consultant when there is a need to grow the value of a business. These consultants not only help to add value to companies, they also can do so in ways that attract cash-rich third parties. Similarly, well-trained transaction intermediaries may orchestrate a negotiation process that can help to increase the money an owner receives at closing.

Your Choice: Soloists or an Ensemble?
Will advisors perform better for you when they act alone, or when working together as a team with the common goal of attaining your exit objectives? I hope the answer is obvious.

What might not be as obvious is how these different advisors (many of whom can be quite independent-minded and even jealous of their “turf”) can be persuaded to work together. What holds them together? The answer is the creation of a written Exit Plan, founded on your exit objectives, to which each advisor must adhere. The Plan lays out the roadmap to an owner’s chosen destination. This roadmap also clearly states the role of each advisor. All advisors know what is expected of them and the date by which each task must be performed. With this Plan in hand you, the business owner, control the tempo and the cost of your exit.

Contributed by Eric Nielsen, Sunbelt Business Advisors.

Sunbelt Business Advisors offers you unbiased information you need to know about Business Exit Planning.

Have something to add? Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.