Exit Planning
Exit planning is the process of developing a business owner’s strategy for what may be the biggest financial transaction of his or her life… the transfer of the business. That strategy may be a succession to the next generation of family. It could be a sale to employees. It may be a sale to another entrepreneur, or acquisition by a larger company. In some cases, it could require an orderly dissolution. In every case, it involves tax, legal, financial, operational and risk management expertise. Exit planning, in the true sense of the word, is coordinating all those skills to work together for a single objective.
- What is “Holistic” Planning?
 Financial planners use the term “holistic planning” frequently. It’s meant to indicate that they consider the client’s short- and long-term life goals and the future they visualize. According to Fidelity Investments Holistic Wealth Planning is continuous and considers two dozen aspects of client wealth objectives.
The Valuation Reality Gap
Only one of ... - Battling Assets
 Occasionally, we run into what I call “Battling Assets.” That is when an owner is drawing a comfortable income from the business, but it is arranged in a way that denigrates the business value, the value of the asset, or both.
Here are three true case studies for examples.
Under-optimized Real Estate
Two ... - Purpose – Life After the Sale Part 3
 The third component of life after the sale is Purpose – “Having as one’s intention or objective.”
Many exit planning advisors discuss the three legs of the exit planning stool – business readiness, financial readiness, and personal readiness. In our previous two articles, we focused on two of the “big three” ... - What is an Exit Plan?
 “What is an Exit Plan” is an article I wrote ten years ago. It was just brought to my attention and I realized I never posted it to Awake for some reason. Here, with some updating, we celebrate its 10th anniversary.
Exit planning is the buzzword for those who consult to ... - Cash Flow Normalization
 Cash flow normalization is done with the intention of identifying Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) or Seller’s Discretionary Earnings (SDE). These differing measures are not interchangeable, but are used by different classes of buyers for different categories of acquisition.
Free cash flow is an important measure when calculating ... - Private Equity Reputation
 We began this series by saying that Private Equity reputation is as the Great Satan to some, and a savior to others, depending on the personal experience of the speakers. In fact, both reputations are well deserved, but neither can be universally applied.
The “Great Satan” Private Equity Reputation
PEGs buy companies ... - Private Equity Leverage
 Private equity leverage can dramatically increase ROI, but it can also be a trap. In our previous article, we discussed the general structure of Private Equity, how it works, and the types of Private Equity Groups (PEGs). They have grown rapidly as an alternative investment that produces far better returns ... - Private Equity and Privately Held Businesses
 Depending on who you are talking to, Private Equity is either the Great Satan or the savior of small and mid-market companies in the United States. The stories depend a lot on the personal experience of the speakers.
Once a vehicle for high-risk investment plays in corporate takeovers (see Bryan Burrough’s ... - Addressing the Value Gap – Truth in Pricing
 Truth in pricing is a common issue when discussing the sale of a business.
The selling price of their company is a point of pride for any owner. When they are willing to share the price they were paid, they usually include everything that was listed in the purchase agreement. While ... - Addressing the Value Gap – Living Expenses
 The Value Gap is one of the most used phrases in exit planning. Simply stated, it’s the difference between what a business owner would realize if he or she sold the company today, and what they need to embark on a financially secure “next act” after business ownership.
Both amounts can ...
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