Section 4A: The need for exit planning

Question 1

A successful exit strategy has three legs

Answer 1

Maximizes transferable business value
Ensures owner is financial prepared
Ensures there is a plan for “what next?”

Question 2

Exit planning is

Answer 2

present tense

Question 3

Exit planning combines what

Answer 3

the plan
concept
effort 
and process 
into a clear simple strategy to build a business that is transferable through the 4Cs

Question 4

What are the 4Cs

Answer 4

Human Capital
Structural Capital
Customer Capital
Social Capital

Question 5

Your clients

Answer 5

Control how and when they exit
Maximize value in good and bad times
Keep more of what they get rather than paying it to uncle sam
Shorten the due diligence and documentation period
Have better control over confidentiality
Have strategic options to choose from
Know their future is secure

Question 6

Blue oceans

Answer 6

denote all industries not in existence today

• untapped market space
• demand creation
• opportunity for high profitable growth
• Many are created from red oceans by expanding existing industry boundaries
• Competition irrelevant because the rules of the game are waiting to be set

Question 7

Red oceans

Answer 7

represent all industries in existence today

• crowded
• profits and growth prospects reduced
• commoditized products and services
• cutthroat competition

Question 8

Historic Transition success rates

Answer 8

• 12 months after selling - 3 out of 4 businesses profoundly regret
• 70-80% of businesses put on the market don’t sell
• only 30% of all family-owned businesses survive into the second generation

Question 9

EPI state of owner readiness survey

What percentage do not know all their exit options

Answer 9

2/3 or 66%

Question 10

EPI state of owner readiness survey

What % have no transition team

Answer 10

78%

Question 11

EPI state of owner readiness survey

What % have no written transition plan

Answer 11

83%

Question 12

EPI state of owner readiness survey

What % have no plan at all

Answer 12

49%

Question 13

What percentage have no plan to cover the 5 Ds

Answer 13

40%

Question 14

What percentage have not completed a strategic review or a value growth project

Answer 14

86%

Question 15

What are the 5 Ds

Answer 15

Death
Disability
Divorce
Distress
Disagreement

Question 16

What % of clients continue on after a triggering event

Answer 16

70%

Question 17

What % of exits are not voluntary

Answer 17

50%

Question 18

Owners are leaving $ on the table because they are focused on

Answer 18

income generation, not enterprise value

Question 19

Exit planning is business strategy

Answer 19

Build, harvest and preserve wealth

Question 20

What are the 5 stages of value maturity

Answer 20

Identify
Protect
Build
Harvest
Manage enterprise value

Question 21

What is the first paradigm shift

Answer 21

Exit planning is business planning

Question 22

What is the second paradigm shift

Answer 22

Value is all about transferability

Question 23

Paradigm shift #3

Answer 23

Adopt a common framework

“ The Value Acceleration Methodology”

Question 24

What does the Value Acceleration Methodology focus on?

Answer 24

Value Growth

and aligning business, personal and financial goals