First Things First: Prioritizing Your Objectives - Partners31: Specializing in Health and Human Services

First Things First: Prioritizing Your Objectives

Wants Vs Needs - Balance


You’ve got to be very careful if you don’t know where you’re going, because you might not get there–Yogi Berra

It’s not always easy to interpret Yogi Berra. But perhaps he is pointing out how important it is to know exactly where you and your business are headed. There will come a time when you leave behind the daily worry and stress of business ownership; have you defined your exit objectives yet? Many owners haven’t defined WHERE they want to be when the time comes, so they don’t know HOW to get there. Unless you prioritize your exit objectives, they may conflict with one another and you’ll find yourself unable to make much headway.

The clearest example may be business owner Bill Wilson. He recently told me he wished to leave his business within three years, be financially secure enough to enjoy his current lifestyle, and transfer his business to key employees. He felt he would be ready to leave right away.

A quick review of Bill’s personal financial statements by our skilled home care business advisors, however, revealed that most of his post-exit income would have to come from his business. But his business wasn’t large enough to attract cash buyers, and since he had not done the required exit planning, his employees had no funds to purchase his ownership interest. A long-term installment note seemed to be the only answer, but this was a risk Bill was unwilling to take.

If Mr. Wilson had taken the time to prioritize his exit objectives, the last resort outcome could have been avoided. For example, if financial security is your top priority, selling to a third party for cash may be the best, and quickest, exit path. But if attracting a qualified third party is unlikely, more time may be needed to devise and implement an exit strategy involving both cash and a transfer to an insider–child or employee.

On the other hand, if transferring the business to the party of choice is more important to you than financial security, and your planned exit time is approaching, financial security in the form of up-front cash must take a back seat. Or if you want to exit soon with cash, but your business cannot be sold immediately, do you wait until the home health care market conditions improve or do you sell now to employees?

As you can see from Mr. Wilson’s example, the three primary exit goals, listed below, must be considered simultaneously. You must prioritize each according to your needs. Rank the following factors from 1–most important to 3–least important.

  • Financial Security 1 2 3
  • Transfer to the party of your choice (e.g. key employees, co-owners, children) 1 2 3
  • Leaving the business when I want (whether this means immediately or never) 1 2 3

Prioritizing your objectives will help determine your exit path. While prioritizing your objectives is difficult, it can make your decisions much clearer. Complete the rankings so you can share them with your exit planning team.

One final word of advice: always solicit the input of your advisor team as you work through these decisions. It is always a good idea to get a fresh set of eyes and experienced mind to help you balance these competing objectives.


About Risa Baker

Risa is Managing Director of PARTNERS 31. Her natural enthusiasm and years of industry experience will successfully guide your business, whatever its size or specialty, through every aspect of exit planning, from strategy to sale.

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