Succession Planning: Exit, Stage Right

Exit planning should formally begin at least 12 to 18 months in advance.


  1. Identify Personal Objectives—When do you want to eventually leave the business, realizing that most buyers will require you to stay on to help transition the business for some period of time? What would you like to do after you leave? Play golf every day? Start another business? What kind of buyer do you want—does their reputation matter?
  2. Quantify Personal and Business Assets—If you sold your business today, how much money would you need to retire or move to the next phase of your life? Is there a gap? Don’t confuse what you believe you need with what your company is worth as the market will eventually determine the value of your company.
  3. Maximize and Protect Business Value—What are the key areas you need to improve in your business to make it attractive to a buyer? Hire a vice president of Sales, build the RMR in your business, drop a product or service that is a distraction? These could be components that drive the value of your business. Whatever your specific value drivers are they should support revenue growth and profitability.
  4. Evaluate Potential Alternative Buyers—You could sell your business to “insiders” who currently work in the company. Typically this requires some form of seller financing in the form of a note to be paid in the future. The other alternative is selling to an “outsider.” Outsiders, whether they are strategic buyers who are already dealers or integrators or financial buyers, will subject your business to a high degree of scrutiny or diligence, but typically pay all cash or require minimal seller financing, and offer less risk.
  5. Plan—A great deal of estate, tax, personal and company planning can be done ahead of time which can greatly impact the after-tax dollars an owner receives. These strategies take time to implement.
  6. Build a Support Team—A professional team of advisors can help you when it is the right time to sell your business and in preparing it for sale. While you could try to sell it on your own, running a competitive process to insure the best deal requires having an M&A deal attorney, investment banker and a professional accountant. Each is important and you should be cautious about an advisor who claims they can do it all. Other professionals that can be integral parts of this process include your personal investment advisor and insurance broker.
  7. Post Sale—Enjoying the fruits of your labor is many times determined by how well you have planned for the next phase.

Today the market for integrators and security dealers who are looking to sell their company and have built a profitable business with revenues exceeding $5 million is strong. Analyzing the gaps in your company and personal objectives will allow you to determine what the right timing might be.