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Joan M. Ridley
Pres., CFP™, CEPA, CBI

2911 Turtle Creek Blvd., Suite 300
Dallas, Texas 75219

E-MAIL:  info@businesswealthsolutions.net
PHONE: 214.692.9192
FAX: 214.523.9001

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Timing is Everything but Planning is a Close Second


Joan M. Gruber Ridley, CFP™, CEPA®
and Richard Jackim, JD, CEPA®

Baron Rothschild, when asked how he became rich, replied, "I always sell too soon." By that he meant he never waited to get out of a business at the very top price. He sold while the price was still rising and by doing so minimized the chances of losing money on any of his investments and businesses. A good friend of mine used to say that “timing is everything”. Ask any business owner who tried to sell his business between 2000 and 2003. Even deals that were in the works were placed on hold. Many businesses are cash flowing very well now and have been for the last few years. It is tempting for many owners to wait one more year to sell just to enjoy the up-cycle we are currently experiencing. But, why chance staying too long at the dance, especially if your business is in a cyclical industry. You could find yourself trying to sell after the market has turned. Seek guidance from a Certified Exit Planning Advisor (CEPA®) to guide and assist you. By delaying your exit you could be gambling several millions of dollars for another year’s net earnings. Ask yourself if this makes sense.

If timing is everything, then planning is running a close second. According to the Price WaterhouseCooper’s study, “Whose Business Is It Anyway?” the number one reason deals fail is lack of pre-sale planning. You will need time to prepare your business and yourself in order to take advantage of the up-cycle. Once prepared, you will be in a position to put your business in play while market conditions are optimal. Start by setting personal and business goals. Ask yourself where you want to be and when. Then chart out what needs to be done to get there and when each of these steps needs to be executed. That sounds easy, but you will find that it is quite a bit more complicated than you originally thought. Seek guidance from a Certified Exit Planning Advisor, (CEPA®) a professional trained in exit planning.

A Realistic Time Frame

It takes time to plan and execute a successful business exit. If you hope to successfully exit your business in two to five years or less, start planning today. If you plan to transfer the business to employees or children, the process is likely to take longer, especially if you need to groom your successor.

Basic Steps in a Typical Business Transition

12-24 months Prepare yourself and your business
2-6 months Select an investment banker, negotiate, and execute the engagement agreement
2-4 months Investment banker prepares offering memorandum and secures your approval
1-12 months Investment banker identifies potential acquirers, sends out memorandum, and answers questions
3-6 months Investment banker negotiates the deal
3-4 months Buyer and its advisors perform due diligence
1-2 months Attorney drafts documents

You Can Get There From Here

If the route to exit your business were a straight line, you might be able to manage the process yourself, but it is not a straight line, it’s a circle! That circle includes several smaller circles that represent the numerous disciplines involved that need to interact with one another throughout, and often beyond, the exit planning process. The art form of successfully exiting is in selecting and engaging the most appropriate advisor from each discipline, knowing when to engage each advisor, and orchestrating the interaction of all involved. This process involves several thousands of hours of work over a period of two to five years. It requires significant experience as well. Designing and supervising this process is easily a full time job. Rather than an oversee this process yourself, or delegating it to someone in your organization, you would be well-advised to engage a CEPA® who is your personal, independent advisor and advocate throughout and after your exit.

The Exit Planning Process

A critical part of the successful corporate transition is in putting the right the team together, and in overseeing their work together. The team involves dozens of professions, but here are the major categories.


The Results

According to studies by the Exit Planning Institute, business owners who engage a CEPA® are nearly twice as likely to successfully exit their business than those who do not, and, they sell their business for 27% more. Historically, those businesses with sales between $3MM to $50MM who have not engaged a CEPA®, have experienced only a 30-50% success rate when trying to sell their businesses while 50% to 70% have been unsuccessful. Those results have been very disappointing for those who have had serious plans for the hoped-for net proceeds. The Exit Planning Institute’s findings also indicate that those who engage a CEPA® receive up to six times more net proceeds for every dollar invested in exit planning preparation.

The Benefits of Comprehensive Corporate Exit Planning

Here is how you can benefit from engaging a CEPA® who can design your exit planning process and advise and guide you through it:

  • Reduces stress
  • Minimizes taxes
  • Maximizes value
  • Maximizes exit options
  • Resolves conflicting goals
  • Maximizes your control of the process
  • Requires that your team members work together for your benefit

Lesson Learned

It is inevitable that the day will come when you will no longer own your business. You will exit either voluntarily or involuntarily, and that is your choice. Ben Franklin wrote "Nothing is certain but death and taxes," and he was right. But, one other thing is certain. By planning your transition from your business, you can greatly increase the odds that yours will be a successful exit. What does it mean to successfully exit from a business? It means simply that you will leave at the best time for you, your family and your investors, and on your terms. It also means that you are in charge from start to finish, and that you are ready to take advantage of great opportunities.


Joan M. Ridley is president of Business Wealth Solutions, a Dallas-based advisory firm that consults with business owners about how to successfully grow and leave their business. Visit our website at www.bwsllc.net. Call us today at 214.692.9192 for a complimentary meeting to learn how we can help you get where you want to go.

Copyright 2008 Joan M. Ridley

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