Exit Strategy and Valuation SCORE Utah Presentation

"SCORE Exit Strategy & Contingency Plan" by Diane Hartz Warsoff, MBA, CBI, from February 23, 2022, outlines the importance of developing an effective exit strategy and contingency plan for business owners. Diane Warsoff, co-owner of Transworld Business Advisors of Utah County, with an extensive background in banking, nonprofit management, and business consulting, emphasizes the critical need for strategic planning in ensuring business continuity and maximizing value upon exit.

The presentation begins by defining an exit strategy as a planned approach to transitioning out of a business, which is essential for all business owners to consider. It distinguishes between an exit strategy, which is a planned change, and a contingency plan, which is designed for unexpected events, highlighting the necessity of both to ensure smooth transitions in various scenarios.

Warsoff argues for the importance of working on these plans well in advance, outlining the key components of an effective exit or contingency plan. These include maintaining accurate and detailed financial records, conducting a thorough analysis of the business, establishing efficient and documented operational processes, assembling a trusted advisory team, and considering the timing of the exit. She stresses that a well-thought-out plan will combine these elements to enhance the business's value and facilitate a smoother transition, whether it's due to retirement, relocation, cashing out, or responding to an unforeseen crisis.

The document further explores different exit options, such as liquidation, keeping the business in the family, selling to a friendly buyer, selling on the open market, or to a competitor. It emphasizes the importance of timing, uniqueness, avoiding concentration risks, having a supportive team, and strong financials for executing the plan effectively.

Additionally, Warsoff shares resources for business owners, including the Small Business Development Center (SBDC), SCORE, the Women’s Business Center, and the Utah Micro Loan Fund, highlighting their roles in providing strategic and financial support to businesses.

In summary, the document underscores the significance of early and strategic planning for business exit and contingency, providing a roadmap for owners to maximize their business's value and ensure a smooth transition.

Transcript

1. How to Develop an Effective Exit Strategy & Contingency Plan Diane Hartz Warsoff, MBA, CBI February 23, 2022 2022 - Transworld Business Advisors of Utah County
2. My Bio Work  Transworld Business Advisors of Utah County, co-owner  Zions Bank, Wells Fargo  Two nonprofits – Utah Nonprofits Association, Community Development Corporation of Utah  Federal Reserve Bank Examiner Education and Certification  Certified Business Intermediary (CBI) designation from the IBBA  REALTOR ® with Presidio Real Estate  MBA in Finance and International Business (Leonard N. Stern School of Business at New York University)  B.S. in Economics in Finance (Wharton School of Finance at the University of Pennsylvania) Volunteer Activities  SCORE & Women’s Business Center, Volunteer  United Jewish Federation of Utah, Treasurer  Transworld Advertising Fund, Treasurer  Utah Valley Chamber of Commerce, member  Point of the Mountain Chamber of Commerce, member  Volunteer and serve on key committees with a variety of other social service organizations. 2
3. Agenda What is an exit strategy or plan? What is a contingency plan? Why should I work on these plans now? What are the key issues to consider? How can I increase the value of my business? When it is time to sell, what is the process? Questions? 2022 - Transworld Business Advisors of Utah County
4. What is an Exit Strategy? A strategic plan with succession built in We all need to think about what we do next What would happen if circumstances were to change in your life? What is the timing for your exit? Why should I think about an exit strategy now? 2022 - Transworld Business Advisors of Utah County
5. Contingency Plan vs. Exit Strategy  An exit strategy assumes a planned change over time, including transition  Usually involves a planned exit  Helps with your strategy on how to grow the business and what you need when you leave  A contingency plan is to ensure a quick, smooth transition  What if something happens to the owner?  What is there is a local declared emergency?  What if something happens to the business? 2022 - Transworld Business Advisors of Utah County
6. Why Work on These Plans Now? 2022 - Transworld Business Advisors of Utah County
7. Components of an Effective Plan Records Analysis of the Business Effective and Documented Processes The Right Team Timing for the Plan Emergency preparedness 2022 - Transworld Business Advisors of Utah County
8. Keep Good Records #1 priority USE your accounting system Enlist the help of an expert – accountant, bookkeeper, CPA Financials drive the value of the business 2022 - Transworld Business Advisors of Utah County 6
9. Analyze Your Business 2022 - Transworld Business Advisors of Utah County 7 SWOT analysis Understand your position in your industry Your industry vis a vis the overall economy
10. Effective Processes 2022 - Transworld Business Advisors of Utah County 8 Procedures Manual Cross-training of staff Can you leave the business for a period of time?
11. Have the Right Team Develop a Relationship with the following: 9 Bookkeeper and CPA Attorney Trusted consultant 2022 - Transworld Business Advisors of Utah County
12. Timing for the Plan What is the timing for your exit? Include the timing in your business plan A good plan will bring together all components & timeline should make sense 2022 - Transworld Business Advisors of Utah County
13. Contingency Plan  Called the “I won the lottery!” plan  Who could step in for you if you can’t work?  How can you keep your business running during an emergency?  Business emergency  Broader emergency (e.g. earthquake, Covid) 2022 - Transworld Business Advisors of Utah County
14. When it is Time to Exit: WhatAre My Options? Liquidation Liquidation over time Keep it in the family Selling to a friendly buyer/employee purchase Sell in the open market Sell to a competing business 11 2022 - Transworld Business Advisors of Utah County Thanks to Susan Ward/The Balance Small Business
15. Once I Have the Plan, How to Execute? From - Built to Sell: Creating a Business That Can Thrive Without You – John Warrilow 2020 - Transworld Business Advisors of Utah County 12 Timing Focus ON the business Avoid Concentrations Be UNIQUE Have a Team Contracts Strong Financials
16. WHEN SHOULD I SELL? Why Are You Looking to Sell Your Business? 2022 - Transworld Business Advisors of Utah County 14 Cash out Retirement Pursue new business venture Focus on other businesses Relocation Losing Money Tired Illness/family situation
17. Selling a Business is Complex What Challenges Will You Face?  What’s my business worth?  Takes time  An emotional process  The process can be complicated  Preparation is KEY 2022 - Transworld Business Advisors of Utah County 15
18. Various Resources  Small Business Development Center (SBDC) and SCORE  Volunteer and free resources for starting and growing your business  Great resources for strategy and one-on-one business consulting  https://utah.score.org/  Women’s Business Center  Services for small business owners, includes a woman-owned business directory  https://utah.score.org/  Utah Micro Loan Fund  Planning and lending for small businesses  https://www.utahmicroloanfund.org/ 2022 - Transworld Business Advisors of Utah County
19. Questions? 2022 - Transworld Business Advisors of Utah County
20. Diane Hartz Warsoff, MBA, CBI diane.warsoff@scorevolunteer.org 2022 - Transworld Business Advisors of Utah County