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3 Concrete Ways Advisors Can Help CEOs Beat the Exit Odds


Dealmakers and advisors for low to mid market business owners know the grim statistics:

  • S. Trust reported that 67% of business owners surveyed have not established a formal succession plan.
  • Tom West, author of the Business Reference Guide states that 70- 80% of businesses go unsold.
  • 78% of business owners who do exit profoundly regret their exit within 12 months of the close (PwC)

Perhaps the most shocking aspect is the high percentage of business owners with advisors who say, “I know I should develop a succession plan, but I just haven’t gotten around to it.” We call this the “knowing-doing gap.”

In some cases, owners attempt to skip the planning stage altogether and move directly to deal execution. When this happens, dealmakers and advisors encounter owners that are often psychologically unprepared and businesses that are organizationally unprepared for the transaction process. The consequences of the knowing-doing gap and failure to adequately prepare in advance limits the ability to maximize the business value and decreases the potential for owners to achieve a life of satisfaction and significance post exit.

None of this is new information for dealmakers or advisors, who consistently provide technical expertise and information to encourage owners to close this gap. The problem is that closing the gap is not only a function of providing expertise and information. The advisor’s dilemma is that they have diagnosed the problem as a knowledge gap, but what they are dealing with in many cases is a psychological gap.

Studies have consistently demonstrated that there are five strengths common to successful business owners:

  1. Need for goal achievement
  2. Innovativeness
  3. Tolerance for ambiguity
  4. Tolerance for risk
  5. Need for control.

While these strengths are an asset for starting and growing a business, they can become a liability for exit, particularly if an owner exhibits certain behaviors (low self-awareness, weak work-life balance, high role-identity fusion, and weak post-exit resilience). The solution to the advisor’s dilemma rests in understanding how to work with an owner’s psychological make-up instead of against it.

There are three easy things advisors can do to begin to increase the likelihood of owners engaging in the exit process before the onset of one of the five d’s (disability, death, divorce, disaster, or disgruntled partners).

1. Build the relationship.

STOP giving more technical advice and START asking new types of open-ended questions:

  • What do you enjoy most about being a business owner?
  • How do you define business success?
  • If you could start with a blank slate what would you choose to do today?
  • What do you want for your future?
  • Tell me about the early days. What did you dream of? What did you sacrifice?

2. Customize your approach.

STOP thinking about the relationship as steps in a transaction and START thinking about the owner as a person with their own style and needs. Consider four broad approaches to how people process information and make decisions:


Do your offerings and processes resonate with each of the types?

3. Increase engagement.

STOP taking an all or nothing approach. How do you eat an elephant? One bite at a time! START making exit planning a bite sized process.

  • Owners are more likely to respond to things they can complete quickly. Use technology to your advantage. What can be completed using survey forms?
  • Owners like to see progress. Break the due diligence and documentation requirements into segments and provide a visual progress update.
  • Owners like to do things on their own terms. Design your process so that owners are able to work through each step with as much independence as possible.

Dealmakers and advisors who recognize that they cannot directly change the behaviors of owners are wise. But, this leaves them in a quandary. Do they wait for a trigger event to engage owners or do they figure how to change what they can control? Savvy dealmakers and advisors reject the status quo and seek out opportunities for delivering their value propositions in a manner that aligns with owners’ appetites.

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