What to Expect When Creating Your Exit–Succession Plan

    2022-11_What to Expect When Creating Your Exit–Succession Plan

    By Measured Wealth Private Client Group

    A business owner never likes to think about the day they’ll give up the reins. But the truth is that all business owners must one day transition the business—which means advanced planning is critical to achieving that goal. But most business owners have no formal exit plan. What is the advantage of creating an exit strategy? Let’s take a look at what we at Measured Wealth Private Client Group cover in our strategic exit-planning process. 

    Stage 1: Initial Discovery Meeting

    Defining exit objectives and goals:

    • What is your desired departure date?
    • What are your income/financial security requirements?
    • What exit routes are open to you?

    Stage 2: Information Gathering

    Personal financial analysis: 

    • Review existing financial, estate, and business plans.
    • Determine gaps in each of these plans, if any.
    • Discuss your wants and needs. 

    Stage 3: Determination of Business Value

    Current valuation and the development of value drivers:

    • Analyze each exit route to determine how to protect and increase business value and understand the tax implications of ownership transfer through sale, gift, and estate. 
    • Obtain a formal valuation performed by an independent third party to set a fair price for company stock based on a consistent methodology for valuing the stock in the future. Include a reasonable discount for lack of marketability and minority interest, if applicable. This provides a benchmark for buy–sell agreements and executive compensation, equity-based plans, etc.

    Stage 4: Choosing an Exit/Transition Route

    • Sell to an outside third party (financial or strategic buyer).
    • Sell to employees using an Employee Stock Ownership Plan (ESOP).
    • Sell the business to one or more key employees (management buyout).
    • Sell to remaining shareholders.
    • Transfer the company to a family member(s).
    • Retain ownership but become a passive owner.

    Stage 5: Implementation of Chosen Business Exit Route and Post-Transaction Servicing

    • Engage shareholders and the company to execute the chosen business exit route (external or internal sale or transfer).
    • Develop a contingency plan for the business (outline key succession management and be able to answer who will run the business in the event of a death or disability of current operational shareholders).
    • Develop a contingency plan for the owner’s family (financial, estate, and charitable planning).
    • Develop an ongoing servicing plan for the business and family (ongoing review to ensure that planning is being followed and to advise in the event of life changes within the family or succession management).

    We’re Here to Help

    Understandably, the process of creating a proper succession plan can be challenging, potentially overwhelming, and even emotional. Most business owners are much better at working in their business than succession planning. This is where professionals can greatly assist owners by illustrating and implementing a clear and concise process, from A to Z.

    Our Measured Wealth Private Client Group team has assisted many of our clients with these issues, and we stand ready to help you navigate these complicated decisions, the transition, and whatever the next chapter holds. To schedule an introductory appointment, reach out today by calling our office at 603-431-1444 or visiting our Measured Wealth Private Client Group website to set up a complimentary consultation. 

    About Measured Wealth Private Client Group

    Measured Wealth Private Client Group, LLC was founded on the core values of our country, hard work, integrity, and uncompromising quality. Independence is our backbone. We diligently work for each client, assisting them in reaching their financial goals.

    For 20 years we have inspired our clients to make informed decisions through education, communication, and service which exceeds their expectations. We serve a select client base, and for the benefit of our existing clients, we have a mutual selection process of accepting new clients every year.

    We invite you to explore Measured Wealth Private Client Group, LLC and “Experience the Difference.”