When the subject of exit strategy is broached, antennas around the organization and within the family go up. The retirement plan of a business owner is a very important subject to family successors, key managers, vendors, creditors and Board members. Carrying on dialogue on this succession issue and achieving traction are two strikingly different goals. Anyone who has ever been associated with an innovative, ambitious, driving business owner recognizes pulling off an exit strategy or even making substantive progress is a formidable challenge. These dynamos are often caught in the Exit Strategy Dilemma.
On one hand, the owner can be relying upon the business for fun, fellowship and stimulation because he/she doesn’t have other hobbies, interests or friends. In many of these circumstances, the spouses are truly not excited about the prospect that their excessive compulsive business dynamo will retire and disrupt a previously well-managed home life.
To make this more complicated, the business may also be relying upon the owner’s experience, drive, talents and strategic relationships with vendors and customers. Successors and senior managers may not be looking forward to assuming responsibility for what the genius was doing so easily. With this potential dual dependency, there is reasonable probability that it is as difficult for the owner to step out of the business as it is for the business to stop relying upon the owner.
With any form of dependency, there is vulnerability. We have the owner depending upon the business for affirmation and activity. If the owner is pushed away from his/her love, there could be a disruptive emotional backlash, depression and even a reduction in general health. Rejection is a matter of perception that can have significant impact on emotional and physical health of an owner. If an unexpected death or disability abruptly takes the owner’s unique skills, talents and experiences out of action, the success and succession of the business could be in jeopardy.
With these potential concerns in mind, the question is How you address this double dependency?
There are three fundamental goals of a seamless exit strategy:
- Optimize the career transition experience of the owner,
- Minimize the trauma that the business could experience from a shocking removal of the owner, and
- Minimize the owner’s continued involvement beyond the time of positive contribution.
There are always competing priorities:
The wellness of the owner vs. the wellness of the business
With these double issues, the withdrawal of an owner from the day-to-day operations of his/her business becomes important to a broad base associated with the business and a delicate issue dependent upon a variety of factors including the:
- nature of business,
- skills and/or services being provided by the owner, and
- available time line.
