Rowe / Fitts / Weeks Your Next Adventure

Planning for Life After the Sale of Your Business
1. Auflage 2019
ISBN: 978-1-5445-0213-7
Verlag: Lioncrest Publishing
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, 200 Seiten

Every good business owner has an operational plan-but only 17% create a fully articulated transition strategy. Even then, the focus is usually on monetary and legal concerns, ignoring the important emotional and lifestyle effects of the change. To take on your transition happily, successfully, and securely, you need a holistic plan that incorporates personal, family, and financial concerns. In Your Next Adventure, the team from Harvest Capital shows you how to craft a robust transition strategy that considers your business, personal, familial, and community needs. From pre-sale to post-sale, Rowe, Fitts, and Weeks will help you plan ahead, assemble the right professional advisors, and incorporate your values, legacy, and loved ones into every choice you make. It's never too early to start thinking about your next venture. Your Next Adventure will prepare you for a future filled with potential, purpose, and satisfaction for you and those you care about.

Autoren/Hrsg.

Rowe, Marshall

Fitts, Jim

Weeks, John

Leseproben

Chapter 1

1. An End…and a Beginning

“What feels like the end is often the beginning.”

—Unknown

Your business is all encompassing, and when you think about a future business sale, personal transition planning appears more difficult than it is, which often results in it being avoided altogether. You recognize the value in planning ahead, but you are so busy running and managing the business that you simply never allot the time to sit down and create a plan, even though the resulting benefits will be immeasurable for everyone involved.

Many business advisors we speak with recognize that these important issues are not being dealt with adequately before, during, and after most transactions:

The [business] advisor community doesn’t spend the time to understand the client’s [personal and family] objectives, or to prioritize those objectives, or then throughout the process to remind the client, “These were your objectives going in. Are we addressing them adequately?” (corporate attorney, interview)

Following the sale, business owners understand they no longer have an operating business generating cash flow but now have cash instead that needs to be invested. They come to recognize the need for expert advice to invest the proceeds of the sale to provide family income. You’ll need guidance in learning how to sustain the lifestyle that you, your spouse, and your family expect to enjoy. But what else do you need to know?

Avoiding Personal Concerns

Addressing personal planning is often difficult for business owners. Life, business, and other distractions get in the way and cause you to push it aside. Between being busy and thinking, I’ve got plenty of time to deal with that later, it’s easy to postpone addressing something that makes you uncomfortable. You may never have considered the need to plan, even though the transition is imminent.

I think the hardest thing for business owners is to recognize the need for personal transition planning. (corporate attorney, interview)

Personal transition planning requires engagement in ways that make many owners uncomfortable. As an entrepreneur, you work with a team of professionals who play well-defined roles: there’s a process, understood methods of communication, specific jobs to do, and they’re done efficiently. Staying within the realm of business issues is more comfortable than dealing with the complex, unpredictable, and often emotional personal planning.

In many family scenarios, the status quo is acceptable. Often, a spouse is engaged in their own professional career or is already retired and has their own social structure. The spouse is happy having a successfully engaged partner and a secure financial life. They’re not always ready to embrace the idea of change. Thinking about life post-sale requires you to leave your comfort zone—the business—and address the personal side of your life, which means encouraging your spouse to move out of their comfort zone during the discussions as well. Not wanting to upset the status quo, you might find yourself procrastinating.

Letting Go…to Embrace New Opportunities

I think many owners only work and don’t cultivate other interests at all. Then when they stop working, they fall apart. (business owner couple, interview)

Business often takes precedence over other areas that need your attention. The sale of your business is, in some sense, like a part of you “dying.” It’s difficult to think beyond that time and is intimidating to consider the event itself. While it’s a life change that is not actual death, it is still the ending of something significant, which sets a very real emotional barrier.

Entrepreneurs don’t know what issues they’ll face during the transition, so they do not know what issues to plan for. While you might be telling yourself “ignorance is bliss,” you’re failing to consider the kinds of challenges awaiting you. Today you have a social structure and a lifestyle: you feel relevant and important, and people constantly look to you for feedback and advice. It is a natural inclination to avoid thinking about what happens when this all goes away. But these challenges are, in fact, opportunities to create a new reality—one with freedoms that take you beyond your business and the boardroom.

Finding Your Support Advocate

The objective is to engage advisors to work with you before the transaction, during the transition, and after the process is finished, to support you and your family. Modern relationships and family dynamics are unique to each family, which means having an advocate with the needed experience and strong communication skills is important. The right professional family advisor can help facilitate important discussions, ensuring that all the issues are identified and discussed as part of the business sale planning. There are advisors who focus specifically on addressing personal and family issues as they relate to business ownership. The facilitator can be a family advisor or, depending on the topic, an estate attorney helping the family understand the complexities of an estate plan. Using advisors as facilitators in communications can be highly productive.

This book will point you in the right direction, help you explore ways of thinking about personal transition planning, and guide you in what questions to ask. Throughout the book, we speak about transition advisors, the merger and acquisition attorneys, CPAs, investment bankers, personal financial advisors, and other professionals whom you bring together to navigate the successful sale of your business and your personal transition to a new life. We will explore each role in chapter 8.

Your True Wealth

The transition plan should involve your family’s true wealth—its legacy. Your legacy will encompass your family’s history, values, and accomplishments. A personal transition advisor will help your family define and communicate a legacy that is meaningful to your family and the community.

Too often, business owners have a piecemeal plan—the estate piece, the tax piece, the sale-of-business piece—but what’s missing is a systematic way to create a holistic plan for your life ahead. Asking the right questions and assembling the right advisors will bring together a functional plan that fits the needs of your life and family as a whole.

The Five Personal Elements

Business owners generally have five complex personal elements integrated with both family and outside groups.

You are not simply selling or transitioning your business; you are undergoing a multifaceted process that impacts you and your family in many ways, now and into the future.

Your strategic plan for transition will address these five elements and impact you personally:

First, it will impact your social structure, which has been intertwined with the fabric of your business and community.

Second, it will impact personal relationships with your spouse, your children, and perhaps with other family members. You may have spent much of your time away from your family, immersed in your business, and this will end once you leave the business.

Third, it will impact your intellectual framework because the business has been your life’s passion and challenge. Where is your intellectual energy going to go? What’s going to absorb your intellectual intensity?

Fourth, it will impact your physical health and well-being. When the transaction is complete, you will have more opportunity to engage in your physical and emotional health, relationships, and other areas of activity and interest you may have set aside while dealing with the many challenges that come with business ownership.

Fifth, it will impact your financial life. Most businesses, especially if they’re successful and of significant size, throw off a considerable sum of cash. The return on equity is quite high when the business is sold. Your previous focus on wealth creation shifts to one of wealth preservation. A key question that must then be answered: How is that money going to be managed to support your family’s lifestyle?

Getting Ready: The Three Clocks

One of the advisors we work with at the Bigelow Company, LLC, describes the process of selling a business in terms of Three Clocks.

One clock is the Industry Clock, for the industry in which the business operates. Ideally, the seller wants to sell when the industry is growing and experiencing a high level of profitability, and when industry valuations are high.

Then there is the Business Clock, which most business transition professionals focus their services on: what your business needs to do in order to be prepared for sale. You need good management in place, good internal controls, and to show success in growing both top- and bottom-line numbers—a set of business practices that, when in place, position your business to be sold at a premium value.

Finally, there is the Personal and Family Clock, which measures your own...