Exit Stage Left – Making a Smooth Transition for the New Generation – Week 3

Week 3: Locate a Professional

If you’ve been following this month’s blog series, you have already estimated what your company is worth and you should be in contact with a business broker to transition your business to the right hands. However, even if you have an accountant, broker and a financial advisor on your team, these experts may not be expressly qualified in business transition work.

There are unique transition firms that work with business owners to highlight the best practices to relinquish ownership of a company and comprehensively prepare for the move. Who can recommend a great transition firm? Start by asking your accountant, lawyer or broker, or consult with a local trade association in your industry.

Entrepreneur Magazine lists the following information as needed before meeting with a transition firm:

  • Financial documents:
    • A minimum of five years of financial documents
    • Audited financials for three years
    • Pro-forma sales and cash flows for two years out
    • Three years of taxes
    • Company insurance documents
    • Personal financial information (account statements, complete copies of federal and state tax returns, estate documents)
  • Customer lists (shows history of longevity)
  • Vendor lists and relationships
  • Operational systems and procedures for everyone and every part of your business
  • Legal corporate documents
  • Contracts with vendors, suppliers, customers and clients
  • Intellectual property rights and assets

These experts can become involved at any stage of your transition to review the work you have completed, provide recommendations and take the necessary actions to get you on the right track. Even after you have completed your transition, a transition firm can work with your financial planner to assist with wealth management.

If you follow the steps below (in order) with a transition firm, you will be able to exit your business in a less stressful fashion:

  • Gather all data and documents about the financials of your firm
  • Interview experts for your transition team
  • Select and begin consulting with your transition team
  • Create and execute your transition plan (which could range from six months to five years)
  • Successfully complete the transaction
  • Ensure that a wealth management system is put in place for a secure financial future

When you started your company, who did you seek the advice of first – an accountant, lawyer or financial planner? Share your selection with us in the comments section below.