Exit Strategies for Business and Complex Asset Owners

Mark Rubin

I am hosting a session on Exit Strategies for Business and Complex Asset Owners on November 16, 2017, in Tucson at 4:00 p.m. The session will entail a presentation and discussion of practical preparations, strategies, markets, and considerations vital to embarking on these transactions. Refreshments, too!

I have been practicing law in Tucson for nearly 40 years, focusing primarily on business and real estate law. Estate planning and fiduciary matters are also part of my practice. (I have been a Licensed Fiduciary—License No. 20546—for a dozen years, dealing mostly with cases involving complex assets, dysfunctional families, or both.) During my practice, I have worked with myriad situations involving a principal’s exit from his or her business and work life, especially considerations involving what happens to the owners’ assets: businesses, real estate, and other investments.

From my vantage point, here are some thoughts:

Time

Most of us wait too long to start the “what does my exit look like” process. Such transitions are difficult and typically require strategic planning and execution. For example, in some cases the ideal buyer for a business is the manager you bring in and groom to be the next owner. In the real world, these “future owners” often disappoint after only a few years. (Or, they die, their spouse can’t stand your community, they get a better offer, etc.) Sometimes, the next generation, who have been “brought up in the business,” decide ultimately it is not for them and leave to embark on other pursuits. The point is, the strategic plan for the principal’s exit must well-considered and planned, often years in advance (to account for, among much else, life.) The day to begin formulating these plans is today.

Emotion and Family Relationships

Business transitions and money can cause family issues and hidden jealousies or other dysfunction to bubble to the surface. We often wear blinders about such problems until they come to the fore surrounding succession, inheritance, and control. Do the kids get along? Sure, often, but not nearly as often as the parents think. Your second wife loves your children, and they love her, … until money becomes a point of contention. Such problems arise more frequently than any of us wants to acknowledge.

Further, your dreams for your children may not be theirs. Your business may have value because of you, and that value may not—in the real world—be transferable to your children. Your daughter might not be as good at X or Y as you think or she thinks. By the way, all of these emotional and honesty concerns apply to a partner, to your employees, and to the buyer whose efforts may provide you with additional income for several years post transaction in the form of an earn out.

Markets

Markets ebb and flow. Experienced business owners appreciate this. Understanding the economic tide, and relating it to future plans, matters greatly.

Again, though, there’s more. Different types of businesses sometimes favor a particular kind of buyer. One size never fits everyone. Is a strategic buyer the best for your business and its continuing employees? Are financial buyers interested in your industry? Does your business have sufficient critical mass or strategic value to attract a variety of buyers or should you concentrate your sales efforts on a particular type?

Professionals

A strong team is essential to help you plan for and execute your strategy. That said, many specialists are “hammers”: if they see a nail, they pound it. For example, tax people focus on taxes. Taxes matter, for sure, but if no one discusses, deeply, the consequences of a tax-driven strategy, real costs may be hidden. Frankly, a goal-driven strategy matters most. You must identify what is important to you and seek out professionals to help you plan accordingly.

Exit Strategies Event

So, we meet on November 16th at 4 p.m. (R.S.V.P me and I will provide location information.) The target audience includes business and complex asset owners, and the professionals who advise them, so please pass this piece along to anyone who should attend. That said, we have limited space.

I will be presenting matters of legal and business relevance and how these areas can interact in the context of succession planning and execution. I will be accompanied by Theodore Bernstein, a mergers and acquisitions transaction advisor who works with Chapman Associates, a middle-market ($5 to $200 million enterprise value) M&A advisory firm. Theodore has years of experience in investment banking and capital markets. He has a strong background in health care, but has experience with many other industries. Although he works in M&A and finance, Theodore is also an attorney and teaches Mergers and Acquisitions at the Rogers College of Law.