Exit Planning

Harvesting the wealth created in a private company can be one of the most daunting tasks an entrepreneur will face in their lifetime. All business owners have unique circumstances that impact the process through which they will exit their business. Delphi has extensive experience in helping business owners achieve successful exits. In fact, Delphi’s founder, Chris Mellen, co-authored Valuation for M&A: Building Value in Private Companies, which includes detailed discussion on many of the exit planning concepts Delphi considers in advising individuals on the process.

There are four areas that need to be considered to develop a plan and realize a successful exit:

  1. The first area consists of addressing strategic business issues that recognize the existing position of the business and processes that will be required for a successful transition. This stage often involves assessing the state of the business, dependence on key customers and management, and industry conditions.
  2. The second area revolves around assessing the owner’s financial situation particularly as it relates to reliance on income from the business as well as the overall diversification of the owner’s wealth. Often times, a business is an owner’s largest asset and primary source of income. Coincidentally, a privately held business is often the owners most risky and illiquid investment.
  3. The third area entails the professional or career goals of the owner. Some owners may relish in full retirement while others may wish to remain active participants in the business they built. Business owners may underestimate the value of their work as well as what work they find most enjoyable and meaningful.
  4. The fourth area consists of personal issues specific to each individual business owner. These issues range of the owner’s age and health conditions to the owner’s desire to transfer control to younger generations, long-time employees, or third-parties.

Delphi can assist with assessing the business, determining a valuation and highlighting changes that may result in increases in value. Once a buyer is identified, we can help to assess deal offers and assist with offer negotiations if no intermediary is retained.