Sooner Business Advisors

The last internal exit option in our series, sale to existing partners.

Part 3 of 8, ESOPs or Employee Stock Ownership Plans.

Do you know which type of business you are operating?

There Are Two Types of Businesses: Which One Are You Operating as an Owner? In the grand scheme of things, there are two types of businesses: "Lifestyle Businesses" and "Growth/Asset Businesses." For some owners, owning a business is about drawing an income, supporting a lifestyle with cars, houses, travel and other perks that the business provides.

The next internal exit option in our Exit Options series, management buyouts.

Last week we discussed the importance of knowing all your exit options. We're kicking it off this week with the first of the seven most common exit strategies, intergenerational transfer.

The most recent State of Owner Readiness Report conducted by the Exit Planning Institute shows that 68% of the business owners surveyed were unfamiliar with all their exit options. Furthermore, when asked how they planned to transition, over 20% of the respondents stated that they did not know.¹
It is crucial to understand your exit options because this decision will greatly influence the majority of your planning process and the outcome of your exit. If you are seeking a timely exit you wouldn't want to choose a strategy such as an Employee Stock Ownership Program, nor would you want to transfer the business to family members if your main goal is to maximize your sales price. It therefore follows that you should have a good idea of all the options and the benefits and drawbacks of each. This will allow you to choose the most satisfactory exit, and it will enable your team of advisors to make the estate, tax, legal, and financial decisions that will maximize the value of your business at exit. Visit www.soonerbusinessadvisors.com to speak with a Certified Exit Planning Advisor and learn which exit options are best for you.

¹ Exit Planning Institute, 2022, Colorado “State of Owner Readiness” Survey.

Do you know which port you're sailing to?

In the PricewaterhouseCoopers 2022 “Pulse Survey”, 77% of executives stated that human capital is their most critical growth driver in 2022.¹ This sentiment is strongly aligned with the Exit Planning Institute’s third stage of value maturity, in which value is built through increased cash flow and an improved multiple. Your multiple is the combined value of tangible and intangible assets. As a business owner, you probably haven’t received much feedback about the value of your intangible assets, yet that is where most of your business value is derived from and where the opportunity for Value Acceleration lies. With global talent shortages reaching a 16 year high,² it is imperative for owners to manage their human capital more than ever. A Certified Exit Planning Advisor can work with you to ensure that not only are you recruiting and retaining the highest value employees, but that they are positioned to evolve with the business as you carry out your exit strategy.

¹ “PWC Pulse Survey: Executive Views on Business in 2022.” PwC, https://www.pwc.com/us/en/library/pulse-survey/executive-views-2022.html.

² ManpowerGroup. “Manpowergroup Talent Shortage Study.” ManpowerGroup, https://go.manpowergroup.com/talent-shortage.

Who has a seat at your table? One of the most common issues we see is Business Owners spending the majority of their time "working in" the business and not "working on" the business. As Certified Exit Planning Advisors we partner with business owners at all stages of their business lifecycle not just when they are ready to exit. We act as a quarterback to break down the silos of advisors already existing in your comprehensive financial picture and access our vast network of subject matter experts to fill the seats that are needed. This allows us to align the Personal, Financial and Business Values, Goals and objectives of the owner and develop a roadmap to where they want to go.... Whether thats retirement, transition to the next generation, Strategic Acquistition, Sale to management, sale to employess, M&A, Third Party Sale..etc.

Understand your exit options and build a team so you can take timing and means of exit out of the equation when the time comes for whatever is next!

Comment below how many of these you were able to answer!

See more at https://www.soonerbusinessadvisors.com