The Rolling 5-Year Exit Plan

Most business owners who are asked about their exit plans will reply that they want to exit their business ‘in about 5 years’. In reality, this 5-year window is a subconscious resistance to beginning the process of planning for an exit. This is a true statement evidenced by the fact that the same owner will – almost always – give the same ‘5-year answer’ when you ask them about their plans for an exit 5 years later.   An important issue that every owner-operator of a family business needs to face is . . . the tendency to delay the planning for your inevitable exit.

The 5-year window can many times reflect an accurate amount of time that it will take for an owner to properly exit a business. However, if that owner does not take any action today, then the 5-year window will often times become an indefinite period of time before the exit planning occurs. 

Business exits do not happen by themselves. Too many owners quietly rely upon a hope that something good will happen to them in the future. Don’t let an outside force in the form of death (or sickness), disability or divorce – or just simple burnout dictate your exit. All of these factors will diminish the value of what you receive at the point of your exit because you are being compelled to exit in a manner and time period that is not suited to your needs. Remember that a proactive approach to planning your exit is the only approach.

@2019 Compass Point LLC - All rights reserved