International Exit Planning Association (IEPA) recently pointed to top trends in exit planning that are redefining exit readiness for business owners. Some of those include exit planning conversations beginning earlier, an intensified focus on business valuation, a greater interest in employee buyouts, and an increasingly popular trend towards founders maintaining ownership yet removing themselves from involvement in day-to-day operations.

As founders contemplate their long-term plans and strategy, a growing number have come to the decision that they want to retain ownership of their businesses for a number of years. Yet they envision a role for themselves with less daily operations responsibility and more freedom.

There are various reasons a founder may wish to take a step away from their traditional role:

• Build operational independence prior to their actual exit, enabling the business to grow without their day-to-day involvement.
• Assume the role of a passive investor or strategic leader without involvement in operations.
• Focus on specific internal projects or objectives that are of particular interest to them such as building business value, acquisitions, or creating a new division.
• Enjoys and excels at the entrepreneurial aspects of business rather than oversight and management.
• On occasion, a founder may stay connected to the original business even while starting a new one.

Preparation for a partial exit
Similar to a full exit, making this kind of transition successfully requires strategic planning on the part of the owner and their team before the founder takes a step back. Some elements that should be addressed include the following:

• Choose your CEO, bring them in with time to know the role in-depth, and be prepared to hand over the reins. Although naming a new CEO is common, there may be cases in which the founder elects to retain the position and title for a time but revises the role to that of a Visionary, while handing over the traditional CEO day-to-day involvement and management roles to a COO or Integrator (as defined by the Entrepreneurial Operating System).
• Develop a strong, trusted, leadership team.
• Create succession plans for key positions.
• Create a long-term, strategic business plan and ensure it is understood by the leadership team you will leave in place – in fact, involve them in planning.
• Ensure that policies, procedures, processes, and positions are clearly defined, documented, and that documentation is accessible to all.
• Consider a business valuation to ascertain current value, then project the value you’ll need to meet your financial goals when you exit fully and determine a timeline and the steps to attain that value.

Don’t forget your people – your greatest asset. They have brought you to this point, created wealth for you, and are making this transition possible for you. Be transparent early about what the transition will involve, if and how they will be affected, and assure them of their ongoing value to the business. Keep them informed and involve them.

The benefits of a partial exit – now and then
A transition that involves a partial step back softens the emotional blow that owners may experience with a full exit. The anticipation of this emotional hit is often at the heart of procrastinating when it comes to planning an exit. This step back allows you to be emersed in the execution of your exit plan, see the exit strategy unfolding, while still having the fulfillment you receive from a continued association with the business.

This type of transition gives the founder a continued connection with the company they created, nurtured, and love while gaining the freedom to address other aspects of the business in the way they choose. At the same time, it creates a foundation for success when it’s time for your full exit since you will have already demonstrated that the business can survive, operate, and thrive without you at the helm. This makes your business much more desirable, no matter your transition path.

Next Steps
I love helping founders find the perfect solution for their eventual exit and helping you craft the strategy that is a perfect fit for you and your relationship with the business to which you’ve dedicated your life. When you have that, your exit path is clear and becomes exciting and inspiring, not something to dread. Contact me for a one-hour, complimentary consultation.

Bob Zarlengo is a Certified Public Accountant in Colorado and Arizona, Certified Valuation Analyst, Certified Exit Planner, and holds the Accredited in Business Valuation credential. His four + decades of experience in public accounting and expertise in financial reporting, income and estate planning, and tax compliance fuel his passion for helping business owners achieve their exit strategy objectives. His clients describe him as a trusted advisor who becomes a friend.