The Middle Market Review Insights on the Middle Market.

Subscribe Subscribe

Subscribe Today

Please provide valid email address

I want to receive:

Thanks for subscribing!

CEOs

The 4 Phases of a Successful Exit Plan

Tags

I’ve worked with and observed thousands of entrepreneurs over the last 25 years. One thing that is always surprising is that the vast majority put little effort into planning for life after their company.

I imagine the logic goes like this: why think about the future? Great entrepreneurs love what they do and enjoy the people they surround themselves with on a daily basis. It’s hard for them to imagine life beyond the organization into which they’ve poured their life.

But everyone will someday exit his or her business — so why not plan for it? As an entrepreneur, you spend countless hours developing a business strategy and goals to get your organization to important milestones. You should have the same plan for your exit. Done right, the exit can be as exciting and satisfying as starting the business. Done wrong however (i.e., not on your terms), the exit process and result can be devastating.

A great resource for every entrepreneur and business owner is Bo Burlingham’s latest book, Finish Big: How Great Entrepreneurs Exit Their Companies on Top. He details four phases of an exit as well as characteristics of what a good exit looks (and feels) like. He also outlines the significance of preparing for your exit well in advance. Burlingham details four phases of exit, which take varying amounts of time to execute:

  1. Exploratory. What are the possibilities? What do you really want from your business and how do you get there? Are there non-negotiables when it comes to your people and culture? Is there is a specific number and/or timeframe that you would be happy with?
  2. Strategic. Recognize what potential buyers view as valuable, and build these characteristics into your organization. Start thinking of your business as a product itself, not just a deliverer of products and services. (Another great resource for this phase is John Warrillow’s Built to Sell.)
  3. Execution. This is the stage where the actual transaction or sale is executed. Know when to initiate this process, as there are typical timeframes for transactions, depending on what type of exit you choose, i.e., a strategic or financial buyer, a management buyout, an Employee Stock Ownership Plan (ESOP), etc. Be sure to allow enough time to identify and align yourself with the right M&A and business advisors.
  4. Transition. Life after the sale. What will you do next? What will your next purpose be? (One resource Bo mentions in his book is the organization evolve.)

Many of the entrepreneurs I’ve worked with have gone through these stages — some successfully, others with more challenges. Many reach financial security, but lose their personal step of purpose.

One thing is for sure, the longer the planning process, the happier the exit. Don’t underestimate the importance of the final phase, transitioning to your next passion after the sale of your business.

As an investor in growing businesses, I encourage our partner company founders and CEOs to think through what exiting on top looks like for them — then plan accordingly to be sure they can reach their goals.

For more from Bo Burlingham, check out our interview with him on The Second Stage radio show.

Learn More About Joining Axial

Request Information

Subscribe to Middle Market Review

Subscribe to Middle Market Review

Please provide valid email address

I want to receive:

Subscribe

Thanks for subscribing!