I sat in my office on a warm summer morning and reviewed my appointments for the day ahead. I scanned the calendar and stopped at the 11 o’clock meeting. A great smile overtook me and I reclined in my chair remembering back more than two decades. I recalled that it was summer when I first met them. They are labeled, somewhat charmingly, a mom and pop business. When I first met the husband and wife team they were very much in love and planning a new venture. Their love story was the stuff of novels and feel good movies: High school sweethearts separated by time and circumstance who reunite in mid-life to find their youthful fires had turned to warm embers and welcome embrace.
Within a year of their reunion they married, and they presented in my office for start-up assistance. Over the next three years we worked together to launch their enterprise and direct it toward their goals. About a decade later I saw them in the office of a colleague as he assisted them in developing an e-commerce line to supplement the original business approach. Through the years their personal relationship deepened and flourished while their business grew in parallel. A month earlier I received an e-mail from them telling me they were on my calendar and wanted my assistance to help them exit their enterprise. My reflections turned from their story to my own history as I thought about the notion that many of the ventures I helped launch in the mid to late 1980’s were today contemplating exit and succession plans.
They arrived on time for our meeting and we were excited to see each other and catch up on our stories. Their business history was one of steady growth and enjoyment for more than 15 years followed by a few serious setbacks and, in the past couple of years, some health concerns. The business was in a three year decline and they were ready for retirement and a change of scenery. While the business was in difficulty the bond between husband and wife had deepened to a graceful rhythm of respect and affection.
I reviewed the financials they brought, referred them to a colleague for an in-depth financial diagnosis, and scheduled a next appointment when they had the findings. When they left my office I was both delighted to see them and a bit burdened by my intuition regarding the cursory analysis of their venture and exit plan. Their primary business asset was in real estate and the market was sharply down. In the last three years revenues were down from the 2005 high and flat the last two years. It seemed, at first review, this was the time for a turnaround rather than an exit and I looked forward to the findings of the financial diagnosis and business valuation analysis.
We met again a month later and the husband was clearly distracted upon arrival. He solemnly handed me the financial reports and business valuation and they waited silently while I reviewed the materials. The detailed reports confirmed my initial intuition: valuation was down 60% from 2005 and the real estate valuation was down by a third.
In the month between meetings I had sketched a turnaround plan that was appropriate for the business situation and their state of health. Without commenting on the financial reports I reviewed my turnaround with them. They smiled, exhaled, and agreed we had an effective and enjoyable plan for them to sell and exit the business…in 2010, two years from now. They were relieved we had a firm direction and were emotionally prepared to renew themselves and their venture to create an optimal exit from the business ownership life stage.
Exiting a venture requires as much planning and thought as launching one, possibly more. By creating a five year exit/succession horizon the business owner can effect the change with optimal timing. Because in exit as in launch, timing matters.
