Transition....It's all about Options and Choices
Updated: Jan 9, 2019
How many of us have been in a position where our options are limited? Whether it's something as simple as going to a restaurant and the menu doesn't have anything we like, to our company stating that to move up in our career, we need to move out of state. Now, all of these have limited options to choose from, but do you want to be in that position when it's time for you to exit your business?
The best time to do something is when you don't have to. This is especially true when you are looking to exit your business. Over my career, I have worked in and with companies that were not in a position to have choices. They had gotten their business in such a financial position that they had to sell, or the owner of the business was so integral that without him, the business value was greatly reduced, or there was no management team in place that could either buy the business, or sustain the business without a new buyer stepping in to run it.
As human beings, nothing is more limiting than not having a choice. Yet, also as human beings, we tend to procrastinate and hope that things will work out without us having to take action. Now, we all know that hope is not a strategy, but with a defined and executable path, you can get where it is you want to go.
So what is that path? As a business owner, there are really two paths that need to be navigated simultaneously. The first path is your personal path. Your personal path needs to consider things such as:
Career - What does the next phase of your life look like? Is it a new business venture, travel, volunteering, mentoring, etc?
Family - How will my family be affected? Are your children wanting to remain part of the business? How will the financial windfall of a sale affect the family? What new identity will you and your family have after an exit?
Financial - How much money do I need to fulfill my next ambition? Travel, vacation home, investments, etc.
Legacy - Will my business name continue on? Is it a priority that my children be involved in carrying on the family business? What do you want for your employees that helped you grow the business over many years of their career?
As you're going down the personal decision path, you must always be considering the business path as a concurrent path to your exit. So what are the things that need to be considered on the business path?
Growth - Is the value of your business at the level needed to achieve your personal financial needs? Does the business have opportunities for growth? New markets or diversification?
Management - Do you have a management team in place? Are they capable leaders that can run the business in your absence? Are they interested in buying you out?
Family - Are family members interested in taking over the business? Are they capable
Career - Are you interested in having an ongoing role in the business? Whether you sell to management or family, do you want to continue to be involved? If you sell to a third party, are you wanting to be able to have an investment and/or an executive role in the future of the business?
Timing - When is it the right time to make a transition or sell the business? How is the market? Do you have an attractive business that has growth potential, strong financial performance, and a management team in place? Who do you want to sell to? Individual buyer, Management, Strategic Buyer, or Private Equity?
Now. these decisions can appear overwhelming. Yet, when broken down into a structured process that provides discovery as well as focus, what may have felt like a transition with no options to choose from, became a transition of choice. So, what position do you want to be in? It is your CHOICE!
Jayne McQuillan, CPA, MBA, CEPA is a strategic management consultant, and the owner of Journey Consulting, LLC, in Green Bay