Business Owner Exit Planning Engagement Tools

More Than Just a Conversation

What tools are available to assess an owner’s readiness to exit a business? What process exists to enable professionals to assist an owner with exit planning? This article is based on three tools presented and discussed at NACVA and the CTI’s July 2023 Business Valuation and Financial Litigation Super Conference. Those three tools are the Business Exit Readiness Index (BERI), the Owners Dependence Index (ODI), and the Growth Planning Index (GPI). These three owner survey tools deliver actionable information for the advisor(s) and the business owner client. These tools are useful at different points of an engagement cycle and provide more than just a conversation starter. These tools are discussed here.

When we talk about tools, any tools, we naturally assume they will work as intended. Those that do not, get relegated to the back of the drawer or the bottom of the toolbox. The same thing can be said about exit planning owner engagement tools. But what makes an electronic tool useful? The answer is obvious and simple: it produces accurate and actionable information.

The three tools discussed in this article were presented and discussed at the NACVA and the CTI’s July 2023 Business Valuation and Financial Litigation Super Conference. Those three tools are the Business Exit Readiness Index (BERI), the Owners Dependence Index (ODI), and the Growth Planning Index (GPI). All are owner survey tools that deliver actionable information for the advisor(s) and the business owner client. These tools are useful at different points of an engagement cycle and provide more than just a conversation starter.

BERI—Regardless of what stage of business an owner is in, this 20-question survey provides the owner with what type of business owner they most resemble. Are they ready to exit, do they need to stay and grow the business, or are they able to choose their exit option?

This survey measures both the financial readiness and mental readiness of a business owner and educates them on the exit options available to them. The high or low scores for both financial readiness and mental readiness are plotted on a quadrant chart that matches the exit options that are best suited for them at their current business status. Most businesses are not ready to sell and need some time to make their business transferrable and valuable enough to achieve their post exit goals.

ODI—This survey measures how dependent the business is on the owner. Though it may feel good to an owner to be the hub of activity and control, the more dependent a business is on the owner, the harder it is to transfer that ownership. It also indicates when an owner needs to delegate duties more often to achieve their ideal lifestyle. Please remember, the greater the dependence on the owner, the greater the risk to the business.

This survey measures eight areas of operations for owner dependence. The eight areas are: Owner Involvement, Internal Operations, Strategy and Planning, Governance and Ownership, Financial Matters, Performance Management, Sales and Business Development, and Company Culture. The Octopus Owner has major control or influence in all areas of the business and the goal of the survey is to enlighten the owner to this dynamic. If the owner becomes unable to work, who will fill these roles and keep the business running and profitable? 

This ODI survey shows the business owner and their advisor what areas of the business need to be developed to run without the owner’s direct involvement. Upon the sale of the business, if the business is dependent upon the owner, the owner will usually have a provision to stay working for a period of time in order to train the new owners and managers how to do what he or she does, and usually will be offered less than if the business is truly a turnkey operation.

GPI—As business advisors, we want our services to have a positive impact on the business which usually means to grow the value of the business. We know how we can help the owner increase the value of their business and we are prepared to roll up our sleeves with the business owner and do the hard work. But what if the owner just wants the business to run smoother and be more profitable; have we wasted time and client resources in solving a problem that the owner does not want to solve?

The GPI is a 20-question survey that measures how committed a business owner is to grow the value of their business. There are 10 questions measuring Commitment to grow and 10 questions measuring their Destination. These results are plotted on a growth quadrant chart that includes 12 Growth and Equity Value Drivers. For a business owner with a low commitment to growth, they may wish to maintain their lifestyle and strengthen their business or plan their exit and let someone else grow the business to the next level. For someone with a high commitment to growth, they may need to focus on business growth and act on an exit later or they are on their way to growing into a chosen, valuable exit.

These Exit Planning Owner Engagement Tools are proprietary tools developed by the International Exit Planning Association (IEPA) and are designed to educate and enlighten business owners and their advisors. Consider them to be the conversational power tools to getting to the internal goals and drivers of business owners. The results of these surveys are the result of client input and not advisor suggestions or assumptions. What better place to start than from the owners’ own answers?

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Anna L. Halaburda, CPA, CFP, CBEC, CVGA, has over 35 years of accounting, tax, auditing, and consulting experience in both the public and private sectors. She has also served as a chief financial officer and VP for a multinational corporation, and manager of a regional CPA firm.

As an entrepreneur, Ms. Halaburda founded and managed her own CPA firm, grew that firm into a multi-office partnership, and co-founded the business consulting firm Little Bear Consulting, Inc., that operated in Denver, CO and Panama City, Panama. Little Bear Consulting, Inc. remains active in Denver to select clients.

Ms. Halaburda is also a co-founder and managing partner of TRiUMPH Business Services, LLC with offices in Denver, CO and Boca Raton, FL. She earned the CFP designation in 1986, obtained her Life and Health insurance license in 2009, and completed the CBEC program in 2013. She is also Pinnacle Equity Solutions 2015 Excellence in Exit Planning Achievement Award recipient.

Ms. Halaburda has built exit strategies into her clients’ strategic plans for over two decades and now offers this service to the entire business community in conjunction with Pinnacle Equity Consultants, LLC. With this professional association, she continues to be on the forefront of training, technology, and collaboration in serving her client’s exit planning and implementation needs.

In 2019 Ms. Halaburda’s focus on Exit Planning led to the founding of Be Ready Inc. in Colorado and Be Ready Exits, LLC in Florida, which are devoted exclusively to Exit Planning, business value building, and transactional oversight services.

Ms. Halaburda may be contacted at (303) 550-2391 or by e-mail to ahalaburda@mytriumph.biz.