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Why it pays to plan your exit strategy early

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Why it pays to plan your exit strategy early

By , November 30, 2018
Strategy-Takes-Time

As ageing baby boomers get closer to retirement and exiting their business, many put exit planning in the ‘too hard’ basket – delaying the inevitable and putting off the sometimes difficult decisions.

By a long way, the most successful exits come with early planning, detailed preparation and careful strategy. But strategy takes time. The longer you have to plan and prepare, the better the outcome and the more options available to you.

Some exit options take years to successfully implement.
A management buy-in or an Employee Share Ownership Plan (ESOP) can take several years as the employees need to fund the acquisition.
If you leave it until the last minute this option is simply not possible.

Most business owners are keen to maximise value on exit – and they should – they deserve to get paid good money for the years of blood, sweat and tears they have put into the business.  A big payday is usually not the number one factor, however. Most owners are far more concerned about the ongoing success of the business, the wellbeing of their employees, looking after customers, suppliers and other stakeholders. For many, the legacy they leave is of the utmost importance.

In order to successfully maximise the business value at the same time as preserving a legacy – exit planning is key. More than a few well-respected business advisers – Steve Covey and Michael Gerber for example – talk about an exit strategy being important. They advocate an early start – Covey’s second habit is “Begin with the end in mind”.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.