Encore Exit & Succession Planning

Inevitably, every business owner will eventually exit their business. Typically, a business is by far the largest asset of a business owner.  Carefully planning, well in advance of a target departure date, is often the difference between an owner being able to exit the business on their terms to live the post-business life as they envisioned it, or something less than ideal.  

Ideally, Exit and Succession Planning starts 5 to 10 years before the planned departure date from your business.  Comprehensive Exit Planning has these critical elements:

• Identify Owner’s Exit Objectives.  The most critical element is clarifying the owner’s transition goals and objectives.   It lays the groundwork for all the planning.  It is what makes the Exit Plan the owners, not some off-the-shelf solution. 
• Target Successor.  Who you are likely to sell to?  Will it be a family member, management team, employees, or a third party?  This decision, along with the target departure date and financial needs analysis are the three universal goals that lay the foundation for an owner’s exit plan.
• Target Departure Date.   Setting a departure date, no matter how far into the future, is a key element to being able to set up a successful exit plan.   The further out the departure date the more options an owner has to successfully exit on their terms.
• Financial Needs Analysis. Determining the amount of income the owner needs or wants as they transition and exit out of their business, and then determining what resources are available to help them meet those needs. If needed, a plan to close the gap between the after-tax sales proceeds and the income you need.
• Business Valuation. The current value of the business is needed to determine if its value will provide the owner the income they need upon its sale or transfer.
• Value Building and Protection Plan.  An assessment of the quality of the existing value drivers of a company, and if needed a plan to document, improve, or protect those drivers. 
• Business Continuity Plan.   A business continuity plan prepares a business to continue if the owner is unable to manage it due to either death or illness.  It is more than having just having enough insurance, it is having a written plan for who does what.
• Employee Incentive Plans Bonuses for key employees to help grow the value of the company and stay with the company after the owner’s transition. 
• Tax Planning.  Review and implement methods to maximize the after-tax proceeds from the sale or transfer of the business.
• Personal Wealth & Estate Planning. A plan to build and preserve wealth is essential for a business owner.   After that, it is established an estate plan needs to be complete so that wealth is utilized 

Encore Advisory helps business owners to determine their exit goals, then coordinates the process to put in place a written Exit Plan.   We coordinate with your existing advisors (Attorney, CPA, etc.) to ensure everyone is aligned and moving forward to reach that owner’s goal.  

The bottom line:  A well-designed Exit & Succession plan can put you on the path to enjoying the fruits of your labor on your own terms.