In part one of this series discussing the five keys to successful exit planning for your business, we talked about taking care of your people. For some it’s top of mind, others need a reminder that their team is what made the exit possible. In this second part we’ll talk about the next key: preserving or protecting your legacy and the legacy of the business that you’ve built or have been involved in building.
#2 – Your Legacy
You’ve probably spent a good deal of time and effort building this company. You’ve been successful at it or you wouldn’t even be able to plan an exit from the business. In some cases, the company you are about to exit has been your life’s work. The legacy you leave behind as you transition to the next phase of your life is another critical aspect of exit planning. How do you manage it? What do you need to be thinking about and including in your planning process?
For as long as you’ve been at your company, the way you do business, the way you treat your business partners, the quality of the work or the products that your company produces, all of these have reflected on you. Your company has likely become a big part of who you are and what other people think about when they think about you. You want to make sure that this carefully cultivated reputation is able to endure after you leave. How do you do that?
Some of the preservation of your reputation is why you ensure your people are properly taken care of when you exit. They will be the ones telling the tales as well as being the key actors of the tales that occur after you’ve gone. When you take care of them, they will take care of you, your reputation, and your legacy.
The other part of your reputation is the company itself. Make sure that it is properly prepared for the transition and that what continues on after you leave works just as well without you as it did while you were there. Ensure that plans for next steps are established and maybe even already in progress.
Setting the Stage for Your Next Act.
Maybe you will find a nice seat on a tropical beach. Or you’ll find yourself a mountain hideaway and enjoy some time away. Or you plan on doing nothing but play golf for at least a few years. But more often than not, high achievers that were able to grow a successful business can’t stay away. They come back and start something new or they get involved as an investor or as an advisor.
To make sure the path is paved for you to become the valued advisor or the sought after investor or board member that is fitting of your achievements, you need to be sure that the legacy you are leaving behind speaks well of you.
- You have a happy team that maybe even misses you.
- Your company continues to achieve at a high level at the guidance of the solid leadership team you built.
- The company that purchased your business sees the addition of your company to their portfolio as a success story that will pay dividends.
All of these legacy considerations are important to your success in your next professional act. Whether that is a new business or a new career at a higher level in the game, what you left behind is what oftentimes defines what lies ahead.
One more legacy consideration to be mindful of that we’ll talk about more in Part 3 is how your deal is structured. If you have an earn-out or a portion of your payment is in the stock of the company that now owns what you built, then you want to make sure that what you are handing off is solid. Once again, legacy can be important.
Looking past the compensation angle, you may also be looking at some sort of transition out of your company from a management or leadership perspective. Depending upon the buyer, they may want you to stay for a year or two and ensure that the company transitions to new leadership effectively.
Your legacy may not end at closing – you may still be cementing the pieces together even after the ink is dry on the contracts. If you think you might be one of those de-motivated leaders that everyone can see is simply “vesting in peace”, then you need to be looking at alternatives to transitional contracts.
Succession Planning is the Key
One way to avoid becoming a “VIP” executive is to put together a solid transition plan before you even go shopping your business around. Look at your current next line leadership and be thinking about how ready they are to step into bigger shoes.
If they’re not yet there, think about what it will take to get them there or if you will need to hire in to get a capable leader in place. If you have some of the top spots lined up with next level managers, you also need to be thinking about their backfills as well – does the next line of managers move up as well or do you hire in?
A solid transitional advisor can help you ask the hard questions, make the right decisions, and be prepared when a potential suitor asks, “so what happens when we hand you the check and you go play golf?”
In part three of this five part series we’ll talk about the third key, determining what kind of deal you want or are willing to make for your business. Having this information in mind before you go shopping your company around is critical to ensuring a positive exit experience for everyone involved.
Ready to Exit? Work with Us.
If you think you are ready to start discussing exit planning for your business, contact Navvee for assistance. Our services range from a simple review and advice on your plans to putting together a full strategy, to assisting with the legal work involved for the deal, to, with direct support from our partners at True North Mergers & Acquisitions, acting as your M&A Advisor and directly assisting with finding appropriate buyers and getting you the best deal for your legacy.
If you’re looking for help with transition planning and developing a successor plan for your business, we can help with that as well. Just get in touch and we can help you develop the plans you need to transition successfully.