Planning your exit strategy as a business owner

Written by Jonathan Ross
19 Oct 2023

Preparing the agency owner and team for transition.

When it’s time to sell the agency, nothing is more important to both the owner and the continued health and long-term success of the business than having a completely thought-through exit plan already in place.

Exit planning is a holistic approach to leaving the business on the owner’s terms.

The key goals of an exit plan.

Based on our experience in helping owners successfully exit their agencies, these are the key goals for your exit plan:

Allowing you to leave on your preferred timeline.

Leaving the agency in the hands of your appointed successor.

Delivering to you the amount of money required to maintain your desired lifestyle.

Maintaining your control of the agency throughout the process.

It’s just as important for the agency to be fully prepared for the transition as it is for the owner. 

Are you truly ready to sell? The four areas that need careful assessment.

Owner’s readiness – In short, are you in fact ready to exit?

Organisational readiness – Is the agency fully prepared for this?

Successor and senior team readiness – They are the agency’s future (and a significant portion of your financial outcome will depend on them). Are they ready?

Continuity readiness – What will be done if something happens to you?

Assessment Area #1 – Owner’s readiness

How much wealth do you currently have without the agency’s transition? How much more do you need to maintain (or achieve) your desired lifestyle post-transition? What’s the value of the agency? Is it enough?

Next, determine your timing for the transition. When do you want to leave? How long are you willing to wait for full payment? (Please note that we strongly recommend that you begin the exit planning process at least 2-3 years before you’d like to leave the firm.)

Assessment Area #2 – Organisational readiness.

It’s just as important for the agency to be fully prepared for the transition as it is for the owner.

How will the agency operate without you? How can your relationships, skills and knowledge be replaced or transferred to others?

Does your exit have an impact on:

Agency strategy?

Client service delivery?

Business development?

Recruiting talent?

The firm’s financial performance and financing?

What’s the plan if it does?

Is there a successor already on staff? Does that person want the job? What will you do if the answer to either of these questions is “no”?

Assessment Area #3 – Successor and senior team readiness.

You can’t sell your agency (or achieve a premium sales price) if you don’t know who your successor is going to be. You need to have already identified, trained and prepared the right person who has the skills, knowledge, temperament and alignment on vision and values.

Your senior team will also need considerable care and attention throughout the transition process including:

What’s their temperament? How do they really feel about their post-transition roles?

Do they have the skills, knowledge, attitude, vision and values to be effective in those roles?

What incentives might be required to ensure they remain committed throughout the process?

Assessment Area #4 – Continuity readiness.

Finally, you need to develop written instructions (essentially a plan) for how the firm will be governed if something happens to you:

Who will be in charge?

Roles of senior leaders.

Roles of outside advisors and trustees.

Finally make sure you always have a“What if” insurance (e.g. – key person policies for you and your successor) in place just in case things don’t go quite to plan.