b'Business ManagementSuccessful CEOs Envision Their Own Exit StrategyBy AileronL eaders need to prepare for the future of theirmust be articulated and understood. The goals company. If that company is part of yourand objectives will be different for every business identity, why not do succession planning?,owner, and can even vary by generation of asks Beth Savage, President of PQ Systems. Bethbusiness owner. Because a founder spends so was part of a team that built a plan for successionmuch time thinking about the business, growing that was implemented when the founder of PQthe business, developing the culture, the strategy, Systems unexpectedly passed. their goals may be very different from the second The key to the plan and process was trust andgeneration era. Different generations will have a communication, says Beth. We realized thatdifferent outlook and a different decision making before we could really move forwardprocess that should be accounted for.with strategic planning, we neededEverybody values their to know what was going to happen with the company. Once that wascompany differently than communicated to the company, it waswhat it really is worthlike a weight lifted. Larry Grypp, President of the Goering CenterValuation and development of financing optionsfor Family & Private Business at the University ofDepending on what the owners intend, there Cincinnati, agrees that trust and communicationis much work to be done to prepare and set are critical for any succession or contingencyup a company for its best possible transition. planning. As a non-profit organization, the GoeringEverybody values their company differently than Center is a leading educational and informationalwhat it really is worth, and the real value is: whats resource center for family and closely helda buyer willing to pay? adds Larry. businesses. Larry says there are several factorsOptimization of legal and tax structuresthat should be a part of the succession planningAnother part of the process is looking at tax process:and legal ramifications. Thats part of why this Trust is not done in several months or even one year. Its never too soon to learn the strategies,It takes an extended period of time to really techniques and ways to develop trust in andevelop someone that the owners, employees, organization. If you dont have trust, its goingthe vendors, the banks, and others can all trust to to be very difficult to have a healthy, effectivemove the company on after the original or the transition and succession. retiring or exiting owners leave.Effective communication and conflict resolutionEvery entrepreneur will exit with or without a plan skills in place, but Larry shares the 3 main types of Closely tied to trust, having proactivetransitions to second or third generation owners:communication is critical throughout the entire1.Internal transaction: This could involve process. How do we learn to communicate wellhanding down a business from one generation with one other so that we show respect, and soto the next, or it could be an internal sale that we let people express whats going on in theirwhere control is transferred within the head? Effective communication engenders thecompany among its leaders.possibility to have deep trust. 2.External transaction: A strategic buyer is A team to help you transition typically a buyer in the same industry.A network of advisors and peers will be important3.Private equity groups: PE Firms (also known as for a business owner as he/she transitions. HavingPEGs) are buyers outside your industry. an outside board is also invaluable. Its never too soon to start planning, even if a A defined and shared purpose business owner is unsure of what the exit will look The mutual vision and goals of those involvedlike. If owners can acknowledge that they do not 26 www.mrca.orgMidwest Roofer'