How to Exit Your Company on Top
Five Elements of a Good Exit
When Bo Burlingham, author and Inc. magazine editor-at-large, began writing his latest book, “Finish Big: How Great Entrepreneurs Exit Their Companies on Top,” he knew practically nothing about exits.
“Most people don’t want to think about the exit,” Burlingham says. As he interviewed 150 business owners during the process of writing his book, what shocked him most was that about 50 percent of people were miserable afterwards. So, he asked himself, “What do people who have good exits do?”
At the Finish Big Conference in Boise, sponsored by Zions Bank, more than 60 business owners and entrepreneurs gathered to hear from Burlingham and other experts about how to properly execute a great exit strategy.
5 Elements of a Good Exit
During his keynote speech, Burlingham explained that his exploration led him to identify “The Elements of a Good Exit.” He believes there are five key factors that determine whether a business owner will have a good exit:
1. Owners feel that they have been treated fairly during the exit process and appropriately compensated.
2. They have a sense of accomplishment. They can look back and know that they have contributed something of value to the world.
3. They are at peace with what has happened to the other people who helped build the business.
4. They have discovered a new sense of purpose outside of their business.
5. For some people, a fifth element: The company is going on without them and doing better than ever.
“Building a business is like a journey, and like every journey it has a beginning, middle, and end,” says Burlingham. “The end is not when you’ve built the business, it’s when you exit.”
According to the author, the exit is not an event. The exit is a phase of the business, similar to the startup phase, growth phase or mature phase.
7 Factors Determine Your Exit
Burlingham suggests that there are seven and a half key factors that determine what kind of an exit you’ll have:
1. You know who you are, what you want, and why.
2. You build a business that can be sold when and to whom you want to sell it — for an amount you consider fair.
3. You give yourself enough time to prepare — measured in years, not months.
3 ½. In choosing a successor, you give yourself enough time to fail.
4. You get help and advice from people who’ve been through it themselves.
5. You do right by the people who’ve shared the journey with you.
6. You analyze why potential buyers want to acquire your business and figure out what they will do with it.
7. You figure out and become fully engaged with whatever comes next.
Family Businesses Face Unique Challenges
Other speakers at the conference included Zions Bank senior vice president of Premier Wealth Services, Garrett Barnes, who discussed the unique challenges that family businesses face as they consider an exit strategy.
Barnes explained that family businesses are driven by values, and that businesses that are value-driven can’t help but be successful. However, although approximately 93 percent of businesses are family-owned, only 35 percent make it to the next generation, and only 15 percent make it to the third generation.
He cited sibling tensions, entitlement and rapid growth among some of the difficulties that family businesses face. His advice included requiring future generations to gain education and work experience outside of the business prior to holding a leadership position within the company, formalizing individual job descriptions and developing an out strategy tailored to the family business.
Learn more about Family Business Services.