From Successful to Significant the Exit Planning Institute's framework for a High-Value Business Transition
Part II: What is Value Acceleration?
The Value Acceleration Methodology is a strategic framework for executing exit planning. It is the value management system that prepares owners for an exit at any time. Thus eliminating the stress of being caught off guard by an exit. The Value Acceleration Methodology was created by Exit Planning Institute CEO, Chris Snider to help both owners and advisors understand that exit planning is simply a good business strategy.
Owners must ask themselves, "'Am I satisfied with the current performance and value of my business?' If they want to improve it, they need to focus on exit planning through the Value Acceleration Methodology." -Mike Pappas, Director of Barnes Wendling CPAs
Exit planning is not just a plan. It is a strategy rooted in execution that grows value while expanding options so that an owner can transition the business on their terms when they are ready. The Value Acceleration Methodology aligns an owner’s business, personal, and financial needs.
Begin With the End In Mind
One of the biggest regrets of owners without a transition strategy is that they failed to integrate the value acceleration process to prepare their business, and themselves, for transition. Owners realize after the fact that they left money on the table because they did not maximize the value of the business before the time of exit.
Rick Feltenberger, of ForwardFocus, explains this phenomenon very well. He shares that failing to plan for your future after your business exit, “Is like saying, ‘I’m not going to plan for next year because it isn’t next year yet!’ In my opinion, a good business strategy focuses on growing and de-risking the business. The Value Acceleration Methodology gets you there.”
Jennifer Ramos shares, “I am always looking at my business from the exit lens. The Value Acceleration Methodology has helped me realize just how important the intangible assets are: Human, Customer, Structural, and Social. I also realized that if I focused on these not only will it drive value to my business but also help me grow and increase profits. My business has grown 35% since incorporating this key methodology.”
Justin Goodbread recognizes that business owners may feel uncomfortable thinking about exiting their business and spend the majority of their energy trying to build profits instead. He shares, “Many business owners place a huge emphasis on increasing profitability. This is understandable since a business must be profitable to remain solvent. But what they fail to see is that this approach is shortsighted. Of course, you want to be profitable, but by working to increase the multiple through the Value Acceleration Methodology you can create real value in your business. In the process, you’ll often increase profitability organically.”
A Three Gate Process
The Value Acceleration Methodology can be broken down into three gates. These gates are: Discover, Prepare, and Decide. Christopher Snider writes in Walking to Destiny: 11 Actions an Owner Must Take to Rapidly Grow Value & Unlock Wealth, Value Acceleration “can be used as a tool to teach your team how to create value, not just more income, measure their performance, and benchmark value creation.”
“Exit planning isn’t about exiting soon. It’s about having an end in mind to ensure you are effectively improving your business now at this moment.” - Matthew Barber, Value Advisory Partner, Auxilium.
These three gates combine the plan, concept, effort, and process into a clear strategy to build a business that is both valuable and transferable. Chris Snider shares, “Value acceleration actions require tireless commitment and relentless execution. Exit planning is simply good business strategy integrated with your personal and financial goals and objectives.”
While a business owner might not be looking to exit their business for years, planning for the future is the best way to expect success during a transition. Having a clearly defined exit strategy through the Value Acceleration Methodology not only builds value in your business today but prepares you for the future. Jennifer Ramos says, “Business owners in many cases like to be in control – and controlling the outcome of transferring out of your business is a no-brainer, and exit planning is the way to do that.”
Over the next few weeks, we'll be sharing parts I - V of From Successful to Significant the Exit Planning Institute's framework for a High-Value Business Transition:
- Business, Personal, Financial: A Holistic Approach to Hight-Value Transitions
- What is Value Acceleration?
- The Discover Gate
- The Prepare Gate
- The Decide Gate
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