Recently the Exit Planning Review distributed an excellent article from T. Ray Phillips titled, “Building Business Value In The Exit Planning Context.”
In it, he talks about building value in a business in anticipation of the owner exiting the company with the right amount of cash they desire for retirement or their next venture.
He says:
We look at building value a little differently because in exit planning, we take a longer view and help business owners prepare to exit their companies when they choose, and for the amount of cash they desire.
So building value is not exit planning, but building value is a necessary and principal part of every owner’s Exit Plan. In turn, Exit Planning provides the context for building value. In other words, building value serves many masters—one (and I’d argue the primary one) is to enable owners to reach their ultimate goal of converting their lives’ work into the post-business lives they desire.
When we talk about building value in the context of Exit Planning we ask:
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What is the company’s current value?
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What value must the company achieve to enable its owner to reach his/her lifetime income and other exit objectives?
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What tactics will you employ to close any gap between today’s business value and the value you need upon exit?
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How can you transfer business value most efficiently (tax and otherwise)?
He goes on to offer some case studies of different clients’ situation, and how they used exit planning to enhance their position.
To read the entire article, click here.