Mastering the Exit Planning Conversation by John Leonetti

It all Begins with a Conversation:
A wise advisor once said ‘nothing happens in our business until you are sitting face-to-face with a business owner’. And, since you are sitting with this owner, it is presumed that the meeting had a formal or informal agenda but, in any case, a conversation is going to occur (NOTE: Pinnacle does a large amount of training on how to network, market, and prospect to get these meetings – both at our 2-day workshop and our Certification Course – but we are skipping past all of that for now and putting ourselves in the actual meeting itself).

The first question that you need to ask yourself is ‘what are you going to say?’ Or, rather, ‘what questions are you going to ask to build a lively and meaningful conversation?’ It is how you approach this initial conversation that will determine what type of success you will have with this engagement. However, before we dive into this actual conversation, let’s first ask how much the owner understands about exit planning by the time you get to this meeting.

You and the Owner Cannot Operate in a Vacuum:
My friend Bruce Wright has a bold proposition for business owners (and advisors) who want to work with him – he tells them that he will not take a meeting with them until they have read his book. By doing so, Bruce is in a position to have a more fully-informed conversation with the person he is speaking with and engage them on the content that he put in his book.

I believe that this strategy can work very well with any piece of content that you have that you want to discuss with someone else. In other words, you do not need to be the author of the content, but you should be well versed in what the content says and be prepared to have a conversation on the topic. Then, by suggesting (or insisting) that the business owner read the book / content prior to your meeting, you can be assured that your conversation will revolve around the topic of the material that you forwarded.

There is another element to this pre-stage of the conversation that you will have with a business owner. Namely, it makes the owner commit to the information gathering process before meeting with you, allowing them to develop questions that you can answer to take your conversation further and assist them with their thinking around their exit. This is very important advice. I sit in the unique position of working with more than 100 professional advisors in my Membership, and every time we discuss a prospect I ask ‘what information did you send for them to read prior to the meeting?’. On occasion an advisor will meet with a business owner ‘cold’ and, almost always, the meeting is not as productive as when the owner commits to reading material in preparation for the meeting. It is simply a fact that there is a very strong correlation between exit planning engagements that are achieved with owners who read the Exiting Your Business book and commit to learning more about the exit planning process prior to a meeting with the exit consultant.

There are two (2) important components to having the owner be prepared for the exit planning conversation / meeting:

1. Exit planning is a new field of study so it cannot be expected that the owner has a reliable base of knowledge to have a solid conversation on this topic. So, without the owner reading a book (or some other content), you will likely spend most of your time educating this prospect / client. This is very good for them but probably not so good for your business as meeting time should be about rapport and relationship building, not necessarily about teaching a lesson (most of the time for free).

2. By being better prepared for the meeting, the owner can see you as a unique resource and develop their questions to make the meeting more productive.

One of the best questions that my friend Bruce asks a business owner at their meeting is ‘where did you see yourself in the book that you read’. I too like to ask the same question to a well prepared business owner who I am meeting with for the first time. I want to know which parts of my Exiting Your Business book resonated most strongly with him / her so that we can get focused more quickly on the issues that he/she faces in their business exit.

Building Both Confidence and Trust – ‘Why Should I Trust You?:
By getting right to the issue(s) that are most important to this business owner, I am in a position to begin to build trust right away. Remember, this meeting is about them, not you. Nothing is more important than this point. You are not there to impress them with knowledge or provide detailed math or legal explanations. And you are certainly not there – at least at this initial meeting – to provide answers to their exit situation. Simply put, you are there to listen. You need to listen to why they are contemplating an exit from their business. The reason that listening is critical is because it allows you to build intelligent questions that are relevant to the owner’s situation.

One of the most striking aspects of this Great Recession has been the loss of trust that people have in each other. And, almost always, a business owner brings to your meeting a bad experience that they had in the past and is guarded against making the same mistake again. That mistake probably started with an advisor doing too much talking, the owner feeling like this person knew what they were doing so they could be trusted and then, at some point, the advisor turned on them by falling down on the level of service and broke the trust that the owner assumed as a part of their relationship.

Selling the Invisible Quote:
In Pinnacle’s Certified Business Exit Consultant™ course we use a book titled ‘Selling the Invisible’ to address practice management issues around discussing exit planning with business owners. We actually have two (2) days of our week-long course devoted to practice management and the approach and engagement of business owners. So, as the book’s name suggests, we are selling an invisible service. And, because exit planning is an emerging field, our prospects and clients do not yet have a frame of reference to understand what an ‘exit plan’ even is.

I use a few quotes from Selling the Invisible at our CBEC™ course that should assist you in Mastering the Exit Planning conversation. They are:

“. . . compared to products, services are loose cannons on deck, capable of pivoting around and blowing up the ship any minute . . .”

“So as a service marketer – doctor or architect, dry cleaner or accounting firm, broker or house-painter – you face prospects almost shaking with worry, and sensitive to any mistake you might make. That is where your marketing must start – with a clear understanding of that worried soul.”

These quotes are included to remind you that you cannot Master the Exit Planning conversation if you do not approach the initial meeting with this mindset. And, don’t take the position that a successful business owner does not have these concerns because they were ‘tough enough to survive in business’. That is a huge mistake – all owners have these concerns and they are intimidated by many professionals and complex talk that they don’t understand. Given that you are discussing the largest financial and emotional transaction of this owner’s life, you need to approach the initial meeting and conversation with that level of respect and to begin the trust-building process.

Discussion of Goals, Readiness, Exit Options and Other Topics in the System:
Once the initial conversation has started, you will at some point in time want to begin to learn about the owner’s goals. You need to discover what they want both for their business as well as for their personal goals.

A part of the ‘goals’ topic is the owner’s readiness to meet those goals. It is very important to discern how far this owner is from reaching their goals. In fact, I would argue that if you do not know the owner’s goals coming out of the initial meeting (or at least the 2nd meeting) then you truly have no idea as to whether (or even how) you can assist this owner.

For example, if the owner lives off of $850,000 per year from the business, has $500,000 saved for retirement and the business has $225,000 in annual cash flow, it is likely that there is a very large Value Gap between the value of the business and what this owner needs to replace their income. Learning these facts early on is critical to the process because it puts you in the shoes of the owner and allows you to deliver advice and guidance that is consistent with their needs.

And, here again we come to the challenge with discussing these issues. Namely, no owner enjoys admitting that they have not planned for the future and that they will need a lot of help to achieve their goals. In order for the owner to share this information with you they must trust you – plain and simple.

Exit Options:
With a solid education in exit planning, you can take those goals and the owner’s readiness and begin to introduce – at a high level – some concepts related to exit options that are available. It is refreshing for an owner to hear about options that are available to them. In particular, a skilled exit consultant can discuss these options in the context of a multi-year plan for this owner’s eventual exit. In doing so, you will be in a position to provide dynamic solutions to a complex situation.

Accompanying these talking points are hundreds and hundreds of sub-points that should be made or incorporated in your thinking as the conversation progresses. This is why exit planning training is so important. You need to have a solid foundation to have this conversation with owners and enough confidence and content to deliver the message in a compelling manner. This is all necessary to assist the owner with moving ahead to the next stage of the engagement and it all begins with your preparation for this meeting – i.e. ‘mastering the exit planning conversation’ and being prepared to deliver on the promises of this conversation with a solid exit planning process.

I’ve spoken with so many advisors who have this conversation and then wonder why nothing has happened. Our next section addresses this.

How Many Meetings Should It Take? What is the Owner Thinking?
A few years ago I did a practice management call titled ‘why does the owner who attended my exit planning breakfast presentation not return my phone calls?’ (Pinnacle’s content library, May, 2010). This call was created to bring light to the fact that an owner is undergoing a major change with contemplating the planning of their exit from the business. And, as a result, it is not uncommon for owners to have delayed responses as they absorb the information that they heard from you (either at a breakfast presentation or at a first meeting). It is important to know that the owner has not excluded the exit planning from their consideration. In fact, the opposite is often the case – owners struggle with these concepts and often take a long time to process the information and make a decision to move ahead.

Therefore, there is no solid answer as to how many meetings it takes to engage an owner with an exit plan. Your best bet is to keep a strong pipeline of prospects and get better and better at building a compelling value proposition to getting started with the exit planning sooner rather than later. This will assist you in creating an environment where the owner can say ‘yes’ to the exit plan and you will move faster towards the engagement.

Where the Real Opportunity Lies with Exit Planning for Owners:
You may be reading this newsletter and thinking that this is a lot of work to attract a new prospect. On the other hand, you may be reading this thinking that what I described is no different than any of the advisory services that you have been offering throughout the years. In either event, I would encourage you to attend an upcoming educational program to learn not only how to master the exit planning conversation but also to figure out how exit planning is going to be a profitable part of your business model, including how you will execute on engagements.

I hope that this newsletter was helpful to you and your practice and I encourage you to attend one of our upcoming webinars or training events to learn more about how Pinnacle is addressing these issues in the marketplace today.

Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA, CBEC and author of Exiting Your Business, Protecting Your Wealth founded Pinnacle Equity Solutions to provide advisors with the tools they need to incorporate Business Exit Planning into their advisory practices. To learn more about John’s Exit Strategy Services visit Pinnacle Equity Solutions

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