Exit planning, Succession planning or Transition planning?


We know. Its hard to keep up with so many terms. What are the differences between exit planning, succession planning, and transition planning? There is no right answer, but here’s how we keep the terms straight.



Succession Planning

Succession planning is a process for identifying and developing new people to assume leadership positions.  Sometimes those individuals also assume ownership. Succession is often a generational concept.  A first-generation business owner who wants to gradually turn the reins over to the children is an example.  Successions can be great business exits under the right conditions.

Exit Planning

Exit planning is the preparation for a business owner’s financial exit from the company.  The goal is usually to maximize the selling price. Exit goals, however, can also be to

  1. Obtain a smooth and painless exit process, or
  2. Reward key employees,  or
  3. Minimize taxes, or
  4. Take some money off the table

There are many flavors for exiting.  They include:

  1. Gifting (as in the succession example above),
  2. A sale to a third-party,
  3. A leveraged buy-out,
  4. A private equity recapitalization, or
  5. An ESOP (Employee Stock Ownership Plan).

Each are viable options in the right circumstances, depending on your goals.

Transition Planning

Transition planning is different and is what we do at B2B CFO®.  Many of the businesses we work with have the following characteristics:

  • The owner(s) are just coming to the realization that an exit will happen sooner than later, and that life is short.
  • The exit options (above) are  a little fuzzy.
  • There are multiple business “skeletons in the closet.” Examples are slow growth, declining margins, wrong employees in key positions, undocumented business processes, etc.
  • A higher valuation is needed. An exit at the current company valuation would not meet the business owner’s financial needs after retirement.
  • The entrepreneur is not yet ready to exit and wants to create a transition plan.

These are areas that a B2B CFO® is uniquely qualified to help with.  We have trained and licensed our CFO members as Certified Business Transition Experts™ .  As such, we can help business owners who have one or more of the characteristics described above.

Please ask for our free B2B CFO® Discovery Analysis to address your transition questions. Email shane@b2bcfo.com or call  707 753-1588.

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