The Three Legs of Successful Exit Planning
A business owner needs 3 things to successfully exit their business.
The Exit Planning Institute (EPI) calls it “The Three Legs of the Stool”. They are:
First: Maximize the VALUE of the Business.
By benchmarking the business against its industry, it is possible to increase the value of the business by working on areas where the company lags or has opportunities to improve.
Second: Make sure the owner is personally READY to exit
The owner themselves need to have a financial plan. They should understand what it is they need to get from the sale of their business to fund their retirement goals.
Third: Ensure the owner has a PLAN for what they will do after.
One of the primary reasons that business sales fall through is because the seller backs out at the last minute.
Often, they have spent 20-30 years or more working long hours in their business. Its their identity.
They suddenly realize they have no idea what they will do without it.
So, its key that they spend time developing other goals in advance for what they will do after the sale.
You might also like my recent blog post:
Almost 70% of Businesses Won't Sell and What You Can Do About It