Home » Make the Most of the Initial Exit Planning Meeting

Make the Most of the Initial Exit Planning Meeting

April 15, 2022

As an Exit Planning advisor, having that all-important initial conversation about your client’s exit strategy is essential to protect their legacy, reach exit goals and enable successful continuation of the business after the exit.

Make the Most of the Initial Exit Planning Meeting

It is challenging for business owners to pour their hearts and souls into their businesses and build a reputable entity. They get to see their vision come to life and create a way for themselves, their families, and their employees to earn a living. Thinking about leaving after all that work can be daunting. As an Exit Planning advisor, having that all-important conversation about your client’s exit strategy is essential to protect their legacy and enable successful continuation of the business after the exit.

In this article, we will look at Exit Planning, what it is, and how to initiate a conversation without your client shutting down.

What is Exit Planning?

Exit Planning is the creation and execution of a strategy that allows business owners to exit their businesses on their terms and conditions. Determining the best-suited exit path involves digging deep into the finances, legal issues, tax options, and consequences a client faces when leaving their business. Establishing an Exit Plan also helps the company and owner think about their options and available solutions when unexpected situations arise.

As an Exit Planning Advisor, you assist the client by forming a written roadmap, setting goals, and getting to know what they would like to achieve before their desired exit. The hope is that when executed in the proper manner, the Exit Plan will preserve business value and minimize tax burdens for the client and their business.

Exit Planning involves the efforts of several professionals and advisors, and gives all parties involved the peace of mind in working towards the same goals and objectives. A poorly designed Exit Plan or lack of one can destabilize the whole organization and adversely affect the company’s success. As business advisors, that’s where you come in to ensure that that doesn’t happen by facilitating productive conversations with owners about the importance of Exit Planning well before they are prepared to exit.

How to Start a Conversation About Exit Planning

As an Exit Planning Advisor, you know the importance of these services. You know that once you can effectively explain the impact that planning will make on your client’s business, they will likely see the importance too.

However, what is the best way to get that conversation started?

As an advisor, you should ask thoughtful questions to gain a clear picture of how the client envisions their ideal exit. Understanding their expectations will help you offer the best strategies to get them to where they want to be. Ask questions that will help to empathize with your clients, such as:

1. What is most important to you when you think about exiting your business?

This question will give you a clear understanding of your client’s head space and what they are looking for or expecting from your strategy. Empathize with their needs and show them you understand and are ready to help them.

2. What is your next great adventure after your exit?

Remind them of their other goals and life after their exit. This will get them excited about the future and give you insights into what they’ll need at the end or the planning process to feel comfortable and fulfilled.

3. What obstacles scare you the most when it comes to reaching your personal and professional goals?

Knowing their desires is not enough. You need to know what problems keep them up at night and figure out how your strategy can help them address their pain points.

4. What role does the business play in your financial freedom?

What is at stake for them? How does leaving their business affect their financial security? How reliant are they on the continued success of the company? The more you understand their financial needs, the better you can help ensure the business has the highest transferable value that will benefit the owner in post-exit life.

5. What is your current plan for exiting the business?

Are they planning on passing it down to their kids or selling it? Are they planning on grooming one of the employees to run the business? Whatever their current plan is, it is important to gather this data and analyze what resources are in place and what resources are needed to get there. These resources drive the timeline and help you to understand if the desired plan is feasible.

Knowledge gained from the answers to these questions and others will allow you to make recommendations that make sense for the stakeholders involved.

Address your Client’s Concerns within the Initial Conversation

Oftentimes, during the initial meeting to discuss Exit Planning, advisors are faced with hesitancy and skepticism from business owners. The most pressing concerns typically deal with when to begin an Exit Plan, and the disinterest of creating one in the first place.

When Should you Start Exit Planning?

The earlier business owners get started with an Exit Plan, the more likely they will create higher transferable value for their business. Timing should be one of the most crucial discussion points with clients in the initial meeting.

Having a plan at least ten years in advance will help your client shape their exit and ensure a smooth transfer of power and responsibilities to their predecessor. As an Exit Planning Advisor, the better you can help your clients answer these questions in the initial meeting, the more understanding you will have of the amount of time and involvement needed to carry out the Exit Plan.

What are the Risks of Not Exit Planning?

For a business owner, there are many hesitations that might stand in the way of the Exit Planning conversation. Overcoming these hesitations will be possible because as an Exit Planning Advisor, you will have the knowledge to warn them of the risks of not planning, such as the following:

Client failure to meet personal and business financial goals by their exit.
Destabilization and devaluation of the business during the client’s exit of the company.
The client, employees, and customers may not be emotionally ready for the change.
A sudden vacuum in the business operations may cause a family business to struggle to continue.
Clients may be forced to exit unexpectedly leave the business vulnerable without the presence of an Exit Plan.

In summary, the initial conversation about Exit Planning requires empathy, as well as preparedness to answer questions from clients regarding the timing and purpose of an Exit Plan. Having taken the time to add Exit Planning to your expertise, your confidence in the initial conversation is key not only in acquiring a new Exit Planning client, but also ensuring those clients are able to reach their goals and aspirations.

For more on becoming better equipped for Exit Planning conversations, check out what tools and resources BEI can offer you on your journey to becoming your client’s most trusted advisor.