I was in a conversation with a business owner recently, and I had to pause and take a deep breath after he spoke those relatively common words, “But my accountant said they provide exit planning.” After my discussion, he discovered that their adviser really is not an exit planner… just a great accountant.

Beacon, America’s Exit Planner®, became one of the pioneers of exit planning nearly a decade ago. Since then, we’ve discovered that while many advisers claim to be exit planners, they’re really transactional advisers. So allow me to shed some light from my experience as a retired business owner and certified planner.

I successfully “exited” as one of three owners of a 200-employee roofing contracting business, helped implement succession and sold to the fourth generation ownership team. Does that mean I understand a lot about exit planning? Yes. If scars, bruises and mistakes are a measurement, then I am an exit planner. I have authentic experience that allows me to understand the challenges facing an exiting owner.

My past company’s team of owners invested six years and more than $250,000 in the late 1990’s for fragmented advice as we wandered down the exit path with two offers from industry roll-ups, a national broker who brought investors and buyers to our company.

Frankly, this was a waste of time because our three owners were not on the same page with our goals and were preoccupied with the day-to-day of our growing business.

Additionally, in the early 2000’s we investigated an employee stock ownership plan and eventually used a management buyout to transfer the stock of three owners to the fourth generation team of five senior managers.

Although I had an authentic experience in the trenches, I didn’t become an exit planner until I went through several years of training, certification and began implementing customized exit plans while navigating business owners to their desired result.

As an exit planner, I’m trained as a process consultant to move an owner’s goal into a matching path that meets their financial target. I’ve also worked on plans to replace the owner, coordinate the moving parts to protect his or her wealth, and reduce their taxes and risk with a comprehensive, holistic result.

Through an extensive process, we begin by establishing the owner’s goal while reviewing and analyzing scattered pieces of information. We consolidate it into one document that coordinates all of the salient parts of the owner’s life to meet their desired outcome. This process can be compared to building a house with an architect’s design whose blueprint coordinates all the subcontractors. The exit plan is analogous to the architect’s blueprint.

In a separate execution phase, the exit planner can implement the exit plan (like a construction manager) and take the role of quarterback to coordinate different disciplines and professional advisers. That includes attorneys, accountants, estate planners, insurance advisers, financial planners, business consultants and others with the production to execute the exit plan.

In my own business exit, our team reactively explored each exit path with well-meaning professional advisers providing us fragmented information. There was no overall holistic directions that connected the isolated silos of information in a clear, concise, coordinated format. The inefficiencies cost our team and company additional time, disappointment and money.

You, the owner, may feel a little disjointed with the different discussions among your advisers. Many times the conversations are focused in their transactional space and key area of practice providing one fragmented aspect of an exit plan. Not a holistic solution coordinating and encompassing all the following disciplines:

1. If you’re asking what will happen to your business stock and family if you die unexpectedly — particularly if the conversation is couched in terms of a buy-sell agreement — you’re discussing contingency planning (which is an important part of a comprehensive exit plan). 

2. If you’re discussing the timing of your business’s sale, strength of the cash flows and business value drivers, you’re having a business planning discussion in anticipation of selling the business (another important component of a complete exit plan). 

3. If you’re asking how much your company is worth within the range of values, you’re dealing with a valuation analysis that should only be completed by an accredited business appraiser (a key point that is central to meeting your value gap and replacing your income).

4. If your conversation is about how to replace yourself with strong managers and a solid management team and move them into leadership for the next business generation, you’re referencing succession planning (which is an important part of a strategy with an exit plan). 

5. If you’re discussing income replacement from harvesting your business in retirement, you’re dealing with financial planning in the context of your primary asset — your illiquid business (a critical component for meeting your long-term financial needs).

6. If you’re talking with your attorney about how your business will transfer your privately held stock to your children and future generations in a tax-efficient manner by protecting your wealth in trusts, this is estate planning (an important conversation to protect your wealth against estate taxes).

7. If you’re having difficulty trying to figure out the when, who and how particulars of your exit, you’re still stuck in the business. You may be having difficulty delegating, training, letting go and seeing yourself outside the business in another useful endeavor. Most advisers are not trained to measure and understand this level of emotional and financial attachment to the business. 

8. When your conversations surround the various tax implications to you, your business and estate, as well as tax-reduction strategies, then you’re discussing tax planning, a critical aspect of business transfers with the possible exposure to over 55 percent taxation.

9. If you’re conversing with an adviser who advertises “exit planning services” on his or her website or business cards, you should ask what specific training and certifications the adviser has. It’s important to take note of how many exit plans he or she has delivered, their outcomes and overall recommendations. Is your adviser a recognized industry leader? An author, speaker or professional in the exit planning area?

Exit planning is the orchestrating of each of these nine disciplines coordinated into one comprehensive report. That report should illustrate many of the options available to the owner as a means of experiencing the transaction from a valuation and monetary standpoint while meeting the owner’s goals.

Like a blueprint, it clearly navigates the owner’s path out of the business. This combined information will give you the best overall result once the exit is complete.

Your exit will probably be the largest financial event of your life. Further, harvesting the illiquid wealth trapped in your business can also be one of the most complex transactions. You want the best information to minimize the risk, make the correct decision, and understand your financial and strategic control issues to replace your income. This process protects your hard-earned wealth and legacy.

So what else does an exit planner do? Good ones will also provide you with the following:  

1. A proven systematic process with a variety of options instead of an isolated solution from the beginning. 

2. A holistic perspective instead of a narrow, isolated view that can be coordinated and fit into a larger solution of many moving parts.

3. The patience and flexibility to move you through the exiting process as new information unfolds that would eventually help navigate a path out of the business and into your next stage of life.

4. A menu of options that reduce your personal, business and financial risk to further reduce your tax liability.

5. The ability to move you beyond certain milestones and hold you accountable for information, promises and time to maintain momentum on the exit path to your goals. Remember, you still are running your business.

6. Coordinates and juggles information, moving past roadblocks and advancing the ball into the red zone and over the goal line. This is an invaluable service of facilitating a complex process to meet your ultimate exit objective.

Beacon simply outlines this with our proprietary process named DAD®, which stands for Discovery, Analysis and Design.

Discovery – In the discovery stage, interviews are conducted, documents are collected and a detailed understanding of the owner’s intentions are obtained.

Analysis – A typical business owner will have an extraordinary number of documents that have already been drafted and executed. These are analyzed to determine if they are first, supporting the owner’s current intentions and structured in a manner that can alleviate unintended consequences. The analysis phase also provides an opportunity with a preliminary outline of the plan.

Design – The design phase brings everything together in a coordinated process. By the last phase, the exit planner will have gained sufficient information to create a comprehensive document, or a blueprint, that will provide the owner with various options and direction towards a successful exit.

So now you understand why I chuckle when a business owner tells me he or she has a trusted accountant or attorney who is an “exit planner.”