"I've been thinking of selling my business. Can you help me?" Many advisors to business owners are hearing this question with increasing frequency. After all, most of your entrepreneurial clients have likely been thinking about exiting their businesses for years. When they finally decide to meet with you, their first question is usually about an exit path, "Who should my successor owner be?"
Owners usually start the conversation looking for advice about which exit path (sale to management, a third party, children or an Employee Stock Ownership Plan) is best for them. In offering advice, advisors respond with descriptions of the merits and demerits of each exit path. Advisors base their suggestions on their experiences with clients in similar situations. This approach is normal, but often (if not usually) wrong.
It is wrong because it jumps the gun: neither owner nor advisor has a full understanding of the owner's goals. They spend time trying to answer questions rather than asking questions to determine what the owner wants and needs in exiting the business.
Contrast that approach with one founded on understanding the owner's exit goals and aspirations for herself and her business. The successor owner is but one of several of an owner's exit goals. There are several other universal exit goals and your job is to help owners understand and quantify all of them.
We suggest that you begin by asking three questions--each based on uncovering one of the three universal exit goals.
The owner's foundational goal, these universal goals and an owner's aspirational goals provide the framework for all planning and execution. Once clarified and prioritized, you know when the owner wishes you leave, how much money or income the owner needs from the business, and whom the owner wishes to be the successor owner. You will design the owner's Exit Plan to achieve these goals.
The benefits to owners of this "Goals First" approach are obvious, but there are several to advisors as well.
Once you help owners to establish their foundational and universal goals you can move to their aspirational goals. Foundational and universal goals are the framework for the Exit Plan you will design and execute for this owner. The owner's aspirational goals dictate the exit path that is best for them.