It is never too early to begin thinking about merging, being acquired, buying another business, selling your own, or training a successor. With a long-term vision of your exit strategy choices, you can start making the incremental changes to ensure the choices are available. Like any other type of business planning, long-range thinking helps you gain clarity on which short-term objectives you need to meet in order to meet your long-term goals. This is imperative for businesses that revolve around long-term, recurring revenue client relationships.
Deciding which plan will work best for you requires a yearly “gut check” and some deeper dive thinking. You will have to factor in how much decision-making authority and/or responsibilities you, or your executives, will want to retain in order to choose the course of action that you are most comfortable with. This will guide your options.
If entertaining the idea of a merger or acquisition, part of the process will be matching your criteria or wish list to other businesses. You will need to identify which have the similarities and differences from your business you are looking for. These could include:
- Number of client relationships and generational depth
- Recurring vs. non recurring revenue
- Collection of Fees
- Communication style and frequency
- Preparation of deliverables
- Services delivered and by whom
- Leadership style
- Roles and responsibilities of staff
- Owner, lead advisor, and staff compensation levels and structure
- Tech platform and usage
The next steps in this process will be building a strategy to migrate data, clients, technology, staff, and marketing and communications after the continuity agreements or sales have been made. The act of visually documenting the strategic steps will surface hurdles and decisions that need to be researched and solved.
If, on the other hand, you decide to train a successor, you will have different considerations to make. You will have to determine if you possess the skills and patience necessary to mentor the next leader or if you will hire someone else to do so. Whichever the case may be, you need to begin running your business with these future plans in mind.