Seeing the Big Picture with Your Business Succession Planning

The success of transitioning away from a business depends greatly upon the mental perspective and preparation of an owner during the planning process.  Business owners tend to fixate their thoughts only on running and growing their business. There is a tremendous value in seeing the ‘big picture’ of your exit and thinking about where you would like the company and yourself as former owner to be. The owner who sees the big picture will be more likely to execute a successful business transition. Stepping out of a business is an opportunity to move both the owner and the company into a new stage of life.

Busines Succession Planning big picture blog postThe Business Transfer Timing Slots

One of the first ‘big picture’ concepts that owners should grasp is the idea of ‘timing slots’.  Much like a slot machine, you want to see if you can match up these three critical areas:

  1. Market timing
  2. Company preparedness
  3. Personal (the business owner) goals

A solid ‘big picture’ of an exit considers all three.

Is the Market Right for Me to Exit My Business?

First of all, we do not believe anyone can successfully “time the market” as it relates to an investment portfolio, selling a business, etc.  However, we do believe that owners and their advisors should recognize when market conditions are generally more or less favorable to a particular transition strategy.  If a business is performing well during a very favorable economy, all things being equal, this can be an optimal time to consider beginning the execution of your transition plan.  Generally speaking, these environments are more conducive to higher valuations, engaged employees, heftier margins and – often times – buyers / investors have a high degree of interest, cash, and lower risk aversion.

As the chart below indicates, the last three decades have followed a similar market cycle. Many analysts predict that this decade is following suit. big Picture 10 years chart for business exit planning

If you believe the information above, your ‘big picture’ in terms of market conditions indicates that the next few years may be favorable to a transition.

Is My Company Ready to be Sold?

The 2nd ‘big picture’ concept is company preparedness.  In other words, your business value needs to be transferable to another party.

There are a large number of items that can lead to poor timing for an exit and lack of company preparedness.  For example, you may have recently had a departure of a key manager or you may have lost a key customer and need time to replace that revenue.  Your CFO may not have your finances in order or you may have a lawsuit pending that should be resolved before transferring the business.

While timing can rarely ever be perfect, it is important to think through the current and forecasted profitability and valuation to see that your company’s preparedness is optimal for a successful transaction that will result in a valuation and deal structure that works for you personally.

Note: We have tools to help you measure how prepared your company is for a transition – contact us to learn more!

Am I Ready to Sell my Company and Leave?

The final ‘big picture’ concept is personal readiness.  In fact, it probably makes sense to begin the ‘big picture’ thinking of your transition with real personal wealth planning.  This can be the most complex and take the most amount of time to navigate.  How the business intersects with the owner’s life, legacy, and goals is what should drive the exit process to begin with!  Often times, this happens in reverse and that can be damaging to the owner’s end result. Bad decisions come from a misalignment with what is most important to the owner.  In other words, the market and company can be perfectly positioned for a transition, but if this does not serve the owner’s motives first and foremost, the process will fail the person it was designed to benefit.

A Vision for the Future Outside of the Company

Prior to considering any of the various options for your business transition, you must be able to recognize two key elements within yourself:

  • Where you are right now
  • Where you want to be after a partial or complete transition from the business

As a successful business owner, you realize that you have created self-worth and profit for both the company and those around you, including your family members.  You have a personal identity from building a company and that might be the only identity that your family and friends recognize. Many owners, without properly considering their new, post-exit identities will be unable to successfully pursue life after their business because of their continued attachment to the business.  In order to ensure a smooth transition, you want to articulate both where you are in your business today and the challenges associated with getting you to where you want to be.

Developing Transition Planning Skills

The key to achieving the vision – or the ‘big picture’ – for your transition is understanding the tools and skills which have enabled you to build your business will be of limited value in planning your exit. You’ll need to learn new skills.  If you are using the same tools, skills and thinking that you used to grow your business, it will be difficult to move on to the next phase.  The primary reason why this is true is that the development of business value is not entirely consistent with the development of fulfilling personal needs and values.

A ‘big picture’ look at your situation will help you ask questions and define your needs to design a good transition plan.

Concluding Thoughts

Seeing the “big picture” in your business planning involves taking the time to reflect on goals of the business, the timing of the market, but most importantly, your interests and objectives outside of the business.  Exploring your personal goals allows you to confidently move forward to the next phase of life, which may or may not include continued involvement with the company.  As in so many aspects of one’s life, perspective is key to ultimate success.  View your transition as an opportunity to a begin a new lifestyle instead of a loss of your business identity, and you will begin to develop a ‘big picture’ for your transition.


Published: July 28, 2016

Authored By: N. Perry Moore, CBEC™, CFP®, MBA

Phone: 812-602-6306




The information in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements. The information does not attempt to examine all the facts and circumstances that may be relevant to an individual’s financial needs. Payne Wealth Partners, Inc. is not soliciting any action based on these statements.

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