We always say that a good consultant is an advisor, not an order-taker. This is evermore true when speaking about the handling and maximization of the most significant asset in your life: your business.
Exiting your business is not something that should be handled alone. You need industry experts, outside perspective, and guidance from those who have an understanding of how a variety of businesses transact. That’s how you identify the current market conditions and trends and align your exit to them so that you can realize the utmost value when exiting the business you’ve built.
We recommend three key criteria as you consider a partner in your exit planning process: acquisition experience relevance, team structure, and compatibility with your business.
Criteria 1: Does your exit planning consultant have the experience you need?
Exit planning is an intimate process that involves understanding the market your business will sell within, how to develop strategic plans fit for what you can achieve and what will most contribute to your exit, and ensuring that this plan can be executed as you go through the certain trials and triumphs ahead.
SMB acquisitions come in several different forms. There are a number of intermediaries and advisors that service mid-sized businesses as this is where many transactions take place. However, as a business owner and operator, you understand that businesses with annual revenue of $1M or $10M or $30M are vastly different. The buyers and buying conditions likewise vary a great deal.
At Bbg, most clients have revenues under $5M, truly fitting into the “small business” category. This is a unique focus and underserved market, and a type of business that often has the owner strongly involved in the operations.
Strategic planning must be carefully handled. Exit planning typically takes place two to five years before a sale and that timeframe can go by exceptionally quickly with so much to organize and accomplish. Plans need to be both aggressive and realistic, as well as focused on the key levers that will provide the greatest impact within reasonable investment. A high level of project management skill is required throughout this time as the execution of plans is the great contributor of success, more than the plans themselves.
In short, the consultant must understand the market your business sells within, how to create strategic plans that will maximize your exit, and ensure relentless execution of such plans. The right exit planning consultant is likely not determined by their schooling or credentialing but by someone who has operated a business before; a fellow entrepreneur who knows exactly what it takes to start and grow a business.
Criteria 2: Who would be on your exit planning team?
Exiting your business involves a number of different aspects, including but not limited to legal, growth, positioning, financial, wealth management, and organizational. To suggest a single person would best handle this would be negligent. It requires a team, each with specialized skills and a fit for your business and situation.
Bbg leads the exit strategy and planning process, driving it forward, and ensuring the best result for our clients. We have a network of CPAs, lawyers, brokers, investors, appraisers, and other professionals that we can tap into based on your needs. We believe that rather than having a single person or team that we need to find the right fit for your situation.
Find out who would be involved for the different aspects that you would address, and ask about whether your own professionals of different sorts could or should be involved. This inquiry can help you understand how the exit planner would treat the process, whether collaborative, controlled, compliant to your whims, or some combination of these. Remember, you need an advisor, not an order-taker.
Criteria 3: Is there true compatibility with my lead consultant?
The sale of your business is one of the most challenging experiences you may face in your professional life. It can be time-intensive, emotionally draining, and demanding on your already extensively used decision-making brain.
We share this not to cause fear, but to provide a realistic perspective. If you’re going to go through this, you need to do it with someone you trust and is compatible with you and your business. Compatibility is going to require industry knowledge, fitting financial acumen, and healthy communication.
The relevance of industry or business knowledge
Your exit planning advisor needs to know operationally how your business works to prepare the right strategic plans that align to how your company operates and what will matter most to buyers. You don’t need someone with singular industry experience, which can sometimes be limiting. You need someone who can map out your business model: who pays you, what you provide for them, and the moving parts that make that happen.
Financial fluency
Necessary to understand how money flows through your business. You don’t need your exit planner to be a CPA; and likewise, this is probably not the best fit. Again, a fellow entrepreneur who has the right skill set and network of partners can align to the reality of operating and preparing your business. If they don’t understand a profit & loss statement and how cash flows in your business, then you can’t move forward with them.
Healthy Communication
Finally, this relationship is heavily dependent on health communication. This includes “healthy tension”, where hard conversations and different perspectives may have to clash in order to bring you and your business to a better place. Similarly to ensuring execution is handled flawlessly, communicating honestly and truthfully is required if you want a successful exit.
Find Exit Planners, Then Find the Right One
As you seek out exit planners, there’s a few places you can look. Search for an exit planner nearby. Ask for referrals and recommendations for your CPA, lawyer, and financial advisor. Talk to fellow business owners who have exited to see who they have worked with.
However you go about finding an exit planner, remember the three key criteria to judge them on:
- Do they have experience relevant to you and your market
- Will you have the right team around you throughout the process
- Are you going to work together positively in this intensive challenge
About the Author
David is Bbg, Inc.’s managing director. He focuses on driving strategic growth and operational effectiveness. Passionate about helping others be at their best and fostering collaboration, he ensures excellence is seen in the clients we serve and the businesses we operate. Follow David on LinkedIn