A Cautionary Tale – Why Exit Planning is Essential

Last week, I read about the unexpected passing of the late-30’s CEO of a rapidly growing consumer products company. The CEO’s tragic death left the company grappling with a leadership vacuum and financial instability, illustrating the critical importance of having a robust exit strategy.  

Without a predefined exit or succession plan, the company struggled to navigate a leadership transition.The company faced significant disruptions, and its ability to maintain customer and investor confidence and operational continuity was severely hampered. The absence of a clear contingency strategy meant that the company had to make rapid, reactionary decisions, misaligned with the company’s long-term strategic goals.

We had spoken with this prospect several times over the past few years and each time, the owner mentioned he was too busy. Clearly, no exit planning occurred before the owner’s unexpected passing. Unfortunately, this is a far too common story, as supported by recent findings from the Exit Planning Institute:

  • 79% of business owners have no written transition plan
  • 49% have done no planning at all
  • 80% business owner net worth tied up in the business
  • 70%+ of businesses put on market do not sell
  • 30% of family businesses transition to 2nd generation and only 12% the 3rd generation

Baby Boomers own two-thirds of U.S. businesses. These owners will be transitioning out of their businesses over the next decade, whether they are prepared or not. As statistics show that only 20%-30% of businesses that go to market actually sell, this leaves 70-80% of businesses without solid options for owners to transition wealth and secure their legacies. Business owners actually spend more time planning vacations than preparing to sell their businesses! 

Thoughtful business owners, who take the time to prepare their businesses AND themselves for sale significantly increase the odds of a successful transition. 

Kinected has developed a proprietary exit planning methodology called ExitBoost™ designed to prepare the business and the owners for an optimal sale process. With ExitBoost™, we work with business owners to break down the exit planning process into bite size steps. We provide a comprehensive view of financial, operational, legal and personal readiness and establish checkpoints to monitor the readiness of the owner and the business to transition. Additional ExitBoost™ benefits include:

  1. Increase Transaction Value: Businesses that have gone through our process are properly positioned to attract premium buyers and have successfully increased valuation by 20-140%
  2. Maximize cash at closing: Exit planning helps to maximize the after-tax proceeds owners receive at closing, ensuring optimal deal structure and tax efficiency.
  3. Increase probability of closing: Exit planning helps increase the probability of successfully closing the sale of the business. ​
  4. Reduced Time to Close: Ensures owner and business are fully prepared for sale, reducing friction and facilitating a quicker close.
  1. Expert Guidance: Receive advice from seasoned professionals and introductions to other vetted deal team members, which helps sellers address potential buyers concerns increasing the probability of a smooth and successful sale.
  2. Reduced Stress on Owner– M&A Advisor prepares business and runs M&A process while you continue to run business.
Exit Planning

By learning from this tragic story and proactively developing an exit plan, business owners can better prepare for the future, securing their legacies, while simultaneously increasing the value of their business.

As you consider preparing your business for sale, we encourage you to speak with an experienced M&A Advisory firm that will increase the odds of your successful transaction. Based on successfully helping other clients increase their valuations by 20-140% we are confident we will add value along the way and make your business more sellable for when you and the business is ready. Kinected Advisors has an 87% success rate for our transactions and we would love to assist you on your journey towards unlocking your next chapter.

Kevin Berson

Kevin Berson

Mergers and Acquisitions (M&A) Advisor | Business Broker

Scroll to Top
Skip to content