This newsletter is designed to put many of the theoretical aspects of planning an exit into a more practical format for your review.  Although every owner’s exit is different and unique to the business and the person, Bill Brown’s exit from his brewery business lends a helping hand to most owners, despite where they are with their exit planning.  The complexities of Bill’s exit are representative of many owners’ situations.  This case study is intended to gain the attention of your imagination as you envision the future exit from your business.

In this first of this three (3) part case study, Bill is confronted with the decision to begin planning for his business exit.  Bill’s advisor, Michael, is his guide on this new journey.  We begin with an introduction to Bill.

Meet Bill Brown

Bill Brown is 58 years old and owns and runs Acme Brewing.  Acme has 60 employees with $12 million in annual sales and $2 million in annual profits (or EBITDA).  After 20 years of growing Acme, Bill is one of the most respected people in his industry.  Despite all of the changes over the years, one constant has remained Bill’s commitment to quality and service of his customers.

Although the spirits business does better than most in a slow economy, it is nonetheless the case that profits have been steadily declining for Bill.  Bill has only slowly reacted to foreign competition because he has been reluctant to commit the capital investment required to compete effectively.  As such, Acme has held its own, but the writing is on the wall for Bill’s future.  Adding to these business concerns, are Bill’s personal concerns which are driving his desire to plan for his exit.  Bill is seeing many friends who are suffering in this economy and is beginning to focus more on the protection of his wealth and a healthy work-life balance, than he is on the next $1 million in additional earnings.

Acme is the largest investment that Bill owns.  He is dependent upon the income from Acme for his lifestyle and Acme is equally dependent upon Bill’s efforts in order to survive as a small business.  Although Bill has a large amount of wealth, it is mostly illiquid.

Exiting Begins with a Plan

Bill recognizes that his greatest strength is running his business.  Over the years he has proven his ability to listen to his gut and trust his intuition.  This has served him well as Acme grew and prospered.  Now, however, he is on shaky ground.  Bill is considering his prospects for exit but has no knowledge of how to handle such a task.  Bill listens to his advisors when they suggest that a great place to start is with a discussion around his desires beyond the business.

A System is the Best Way to Get Started

One of Bill’s trusted advisors, Michael, has training in exit planning.  As such, Michael wants to ask Bill a few questions to get started.  Michael wants to know:

  1. What does Bill truly want from his business exit?
  2. Why has Bill chosen now to begin his planning?
  3. What is Bill’s best guess as to when he would like to exit?
  4. How much of Bill’s net worth is tied to his business?
  5. Does Bill know the options that are available for his exit?
  6. Does Bill have any sense as to the ‘range of values’ of his business?
  7. What is the plan for all of the personal items related to the exit? This includes:
      • Tax planning
      • Financial / Investment planning
      • Life Planning – How will Bill spend his time after the exit?
      • Estate Planning – Will Bill’s wealth go where he wants?
      • Estate Tax Planning – Will Bill’s hard-earned wealth be subject to estate taxes?
      • Risk management – Does Bill have adequate insurance to cover the risks in his business and life?

Using this system, Michael intends to have an initial, deep level of conversation regarding Bill’s exit.  This comprehensive approach will help Bill think beyond the ‘transaction’ and business aspects of his exit, and to align his thinking with his true objectives.  After all, Bill built this business to have financial freedom and to control his own destiny.  However, in light of today’s economy, Bill does not feel very ‘free’.  How can this change?

Goal Setting and Readiness

Michael impresses upon Bill that a comprehensive approach is optimal.  Bill wants to eventually be somewhere else with his life but he cannot currently see his ability to leave the business behind.  Michael explains that this lack of vision is the primary reason that most owners do not plan their exits.  It is very difficult, and against human nature, to plan for something that you cannot envision.

Michael begins to address the issue by walking Bill through series of question that helps him define what his future life would look like – the life that he would lead if a certain percentage of his time could be spent not only physically away from the business, but also ‘away’ from the worries of the business.  Bill begins to define places that he would like to go and things that he would like to do.  All along, Bill reminds Michael that he does not want to ‘let go’ of the business.  He simply wants to plan for the exit.

Michael agrees, highlighting that Bill will not leave the business anytime soon, but will be prepared for the day when eventually he will.

A Six (6) Step System for an Exit

With the goal setting out of the way, Michael turns to the next topics, in the following order.

  1. Goal Setting
  2. How much money does Bill need to extract from the business to have ‘financial freedom’?
  3. What type of exiting owner does Bill most resemble?
  4. What exit options are most suitable to Bill’s needs?
  5. Will the exit option that Bill chooses give him the Value that is needed to meet his goals?
  6. What execution items are necessary for success in Bill’s planning?

Bill and Michael have taken the most important step forward in their planning work together.  Bill has made a commitment to the planning process and Michael has established a framework through which Bill’s plan will be developed.

Bill returns to work with a certain peace of mind that he is taking definite steps in the direction of protecting his illiquid business wealth.  In doing so, Bill can now devote a percentage of his time – when he is not completely focused on running his business – to the continued building of his exit plan and moving towards a new reality for himself when the execution of the exit planning is complete.  In this regard, Bill has opened himself to the idea that making these changes is a necessary part of his overall business planning and that he and his business (and the employees and everyone else who is dependent upon that business) will prosper in the long run.


The next two (2) editions of our exit planning newsletter will further discuss important aspects of Bill’s exit planning.  Again, this information will hopefully inspire you to further advance your plans for your own exit.

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