By: Patrick Ungashick
This article is the final installment of a seven-part series on what business owners need to do once they reach the Last Five Years before exit.
You, as a business owner, must answer five critical questions once you reach five years before your desired exit. These five questions define your exit goals and help shape the plan for how you will achieve those goals. As stated in previous articles in this series, there’s no way to sugar-coat this—answering these five questions must happen as you enter Your Last Five Years. Without clear answers, you will not know the steps needed for your exit planning, and you potentially run out of time to maximize your exit success.
The five critical questions are:
|1 - What is My Likely Exit Strategy?|
|2 - How Much Do I Need to Net From My Exit?|
|3 - What Do I Want My Legacy to Be?|
|4 - What Do I Want To Do in Life After Exit?|
|5 - How Exitable is My Company?|
NOTE: Click the article links above to review other installments of the 'Your Last Five Years' series
In the previous articles in this series, we explored the five critical questions you as a business owner must answer once you reach five years before your desired exit. As stated in these previous articles, there’s no way to sugar-coat this—answering these five questions must happen as you enter Your Last Five Years. In this last article in this series, we will discuss the remaining steps owners need to take once you reach the point where you intend to exit within the next five years.
Assemble Your Team
Once you arrive at Your Last Five years, it is time to assemble your exit advisory team. Trying to exit without professional assistance is a recipe for failure, and you have only one shot at exit success. First, there will be many highly technical issues to address during exit dealing with legal, tax, accounting, and financial matters. Second, preparing for exit takes hundreds and sometimes thousands of hours of work. You and your management team likely cannot afford to take your eyes off the company ball during the Last Five Years, so outside expert help brings needed bandwidth. Last, if you are selling your company, then your buyer realistically will have more experience doing deals than you and will exploit it against you if you don’t have your team of experts on your side.
Your advisory team can be broken down into two components, a Core Team that every business owner needs, and then a Support Team which varies by your likely exit strategy, as indicated in the chart below. (Remember, selecting your likely exit strategy is one of the questions that must be addressed when you reach Your Last Five Years.)
Once you have your Core Team identified, the next step is to meet with them as a group and share with them your answers to the five questions reviewed in this article series.
Five Exercises to Get Started
Ask any owner who has exited if, in retrospect, he or she would have started getting ready sooner and very likely he or she will advise you to get started planning your exit as early as possible. Once you reach Your Last Five Years, time will become limited and precious. Five years is only 60 months or 1,860 days. It will go by quickly.
Need additional help formulating where to go from here? Consider these final exercises to define your exit goals, and how to get started.
- Imagine you are looking into a crystal ball, and visualize yourself five years from now, on the day immediately after you have exited. Write down exactly what you wish to see. Be as specific as possible.
- Write down five outcomes you want to avoid in the course of your exit. Keep the list handy as you go forward.
- List five people who can help you achieve your exit goals. Set a deadline to speak with them.
- Describe the top five factors that could undermine your exit success. Review them with your advisory team.
- Identify the first five people you want to thank as part of your exit plan. Share this list with your close family and advisors.
To discuss your Last Five Years, and how to plan for and achieve a successful exit, contact a member of the NAVIX team to schedule a complimentary, confidential consultation.