Exit Planning Services

The Exit Planning Process

As a member of the Business Enterprise Institute -- the nation's premier exit planning organization -- Rocky Mountain Capital deploys the BEI Seven Step Exit Planning Process™. This process is a customized comprehensive approach, defining an owner's unique personal objectives, and converting current reality into the desired outcome.

The process is flexible, and adaptable to the client's needs. Depending on your timeline and circumstances, we can prepare a complete plan -- incorporating all 7 steps outlined below. Or, you can choose a component plan: start with steps 1 & 2 (objectives and assessment), and add any one or more of the remaining 5 components -- going forward to other components as your resources and exit timeline may dictate.

We define success as leaving your business to the successor you choose, for the price you want, at a time you pick. An Exit Plan makes all of this possible -- helping to maximize the financial return, minimize tax liability, plan for contingencies and ultimately secure a successful transfer of the business.

Step 1 - Owner Objectives

• Articulate, quantify and test feasibility of owner objectives
• Key exit objectives identified include:
  • the owner's desired departure date
  • the value that the owner wants or needs from the business
  • the individuals or entities to whom the owner wants to sell or transfer the business.

Step 2 - Business and Personal Financial Resources

• Determine the starting point -- what owners now have; how that converts to desired state for exit
• Personal resources -- current assets and income independent of the business
• Business resources
  • Current business value; cash flow the business now generates
  • Purchase finance sustainable, at current status of the business
• Projected business resources
  • Cash flow and other determinants to yield desired value, and purchase financing capacity, at sale

Step 3 - Maximizing and Protecting Business Value

• Identify Value Drivers -- elements that:
  • protect current business value
  • build future value
• Devise specific steps & timeline, using Value Drivers to reach projected results
• Identify risks, and provide for contingencies to protect key value elements, such as management depth and continuity, and business assets

Step 4 - Ownership Transfers to Third Parties

• Define probable types of acquirers, to select proper marketing approach
  • Lifestyle buyer / Industry buyer / Strategic buyer
• Select preferred sale tactic:
• Controlled auction -- simultaneous bidding from qualified group of buyers
  • Negotiated sale -- price & terms negotiated with pre-selected buyer
• Identify transaction team suited to size & type of business, and preferred sale method

Step 5 - Ownership Transfers to Insiders

• Detailed plan for transfer to children, key employees or co-owners
• Tactics to qualify insiders for financing (insiders usually will not have sufficient cash for equity)
• If seller must finance, design to maximize security of owner's receiving full payment of purchase price
• Design to minimize tax consequences to both buyer and seller

Step 6 - Business Continuity

• Provide for contingencies while comprehensive plan is being realized, prior to ultimate transfer
  • In case of owner or partner death or disability, provide for:
    • Continuity of ownership
    • Continuity of management

Step 7 - Personal Wealth and Estate Planning

• The sale of a business generates cash for owners, their families and the IRS.
• Plan to preserve wealth and minimize taxes
  • Post-sale and during retirement
  • For family and heirs
  • For charity and other legacy purposes

RMC's Role as Exit Planner