Exit Planning - An Introduction by Exit Plan Pros

8/9/2019 Exit Planning - An Introduction by Exit Plan Pros

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Exit Plan ProsLarchmont Associates, Inc.

An Introduction to Exit Planning

for Business Owners



OverviewReasons to consider Exit Planning:

It helps you list and prioritize objectives

relating to your business, family and

finances.

Creates a path for you to fulfill your

objectives.

Provides sophisticated advice and solutions

to meet or exceed your objectives.

Exit Planning puts you in control of your business and your destiny!



Common Traits of Business Owners

T ake this quick test:

Is your business your largest asset?

Does day-to-day management take up all

your energy leaving you no time to focus

on long term strategies?

Do you feel that your business has not

reached its full potential?

Do you feel like you are on a financial or

managerial treadmill?

Are you missing an Exit Strategy?

I f you answered Yes to any of these questions, you may benefit from Exit Planning!



Evaluate your business & personalresources.

Maximize and protect your business value.

Assess your business ownership transfer

options.

Plan for business continuity and

contingencies.

Increase your personal wealth and reduce

taxes.

Exit Planning Can Help



Business & Personal Resources

Review all financial resources.

Perform a financial needs analysis.

Determine if your resources meet your

needs.

Perform a business valuation.

Need a valuation for the resource and

needs analysis.

Use the valuation as a baseline for

measuring the results of any business

value enhancement strategies.



Maximize & Protect Business Value

Design strategies to:

Preserve, protect and increase

your business value.

Increase your profitability and

cash flow.

Retain and motivate key

employees.

Decrease Taxes.

Protect your business assets.



Business Ownership Transfer Options

Analyze transfer options to:

Management

Family

Third party

Prepare the company for transfer.

Minimize taxes upon transfer.

Disposition of real estate after transfer.

Timing and cash expectations.

Relationship to other financial objectives.



Continuity & Contingency Planning

Assure the business survives any

unforeseen catastrophe:

Build a second tier management

team.

Assure continuity of themanagement team.

Prevent a financial meltdown due

to partnership buyout or estate

taxes.

Disposition on death or disability.



Estate tax minimization

Asset titling and beneficiary designations

Lifetime wealth management

Asset protection & risk management

Integration of business and personal

financial and strategic plans

Personal Wealth & Estate Planning



Specific Benefits to Business Owners

Selling to a third party:

Maximize company valuation prior to

transaction.

Resolve problems that may hinder any

transaction, before it is time to sell.

Minimize tax impact of any transaction.

Maximize shareholder benefits until the

time of the transaction.

Create contingency plan for you, your

family and the business in case of

unforeseen loss before any transaction

occurs.



Creating Your Dream Advisory TeamW e have a full compliment of experts

Tax and Benefits Planners

Estate Planners and Lawyers

Wealth Managers

Insurance Planners

Business Growth Consultants

C osts? Most will provide initial services free of charge.



45 years old with a successful control

systems integration company for the past20 years.

Business required most of profits to be re-

invested back into the company.

No other major assets outside the

business .

Tom also had no:

Strategic business plan

Exit plan Tax plan

Estate plan

Meet Tom: Exit Plan Pros Case Study

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At the time of the assignment, the company

had:

Revenue of $2,800,000

EBITDA of $500,000

Baseline value estimated at $2.0MM

No major assets outside the business.

Toms Company

Tom before his Exit Plan



Toms Review

T oms review included:

Corporate Valuation

Corporate Benefits Optimization

Estate Planning Review

Retirement Planning Review

Integration of Business and Personal Plan



Toms Results

Tom couldnt afford to sell his business

at its current value and meet all of his

personal financial objectives.

He needed to significantly grow the size

of business.

There were a number of valuation

enhancement strategies that could be

employed to grow his business.



Business Value MaximizationSome of the strategic options implemented:

Development of a second tier

management team.

Hiring of a full time controller.

Creation of a sales department separate

from customer service .

Improvement of the costing and reporting

systems to better track performance andprofitability.

Expansion of the geographic area served

by the company.



Busi ess erf r a ce fter 48 t s:

Reve ue i creased t $8.6 (fr

2.8 )

Cas fl w i creased t $2.3 (fr

$500K)

C pa y s ld t a strategic buyer f r

$8 $-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

2002 2006

$2,800,000

$8,600,000

$500,000

$2,300,000

Reve

ue

¡

r¢

fit



More ResultsBusiness Valuation

Before: $2MM

After: $8MM

Value-added: $6MM

Professional planning and implementationalmost quadrupled the value of Tomscompany in 48 months!

Tom saved $700,000 in capital gains taxes.

Tom also developed an estate plan thatsaved over $1 million in estate taxes.

Best of all, Tom dramatically increased thevalue of his company.



Closing Comments More than 90% of business owners do not have an exit plan.

Most business owners do not know what an exit plan is.

An exit plan is an excellent way to gain control of your business and your future.

It is never too early to begin planning your exit.

Please contact Gary T. Brooks at [email protected]

Or visit www.ExitPlanPros.com/blog for more information

Documents

Exit Planning - An Introduction by Exit Plan Pros