Business Exit Planning | The McFarland Group

Business Exit Planning and Performance Equity Compensation

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Unlock Transferable Value
Retain Talented People
Achieve Your Transaction Goals

How are you creating transferable business value?

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How do you unlock transferable value?

If you are like most of the business owners we guide, you aren’t certain how to determine your business value. If you do have a valuation, you may not know how much of the business value is attributed to you. Estimating business value and determining transferable business value are closely related when preparing to transfer business ownership.

A valuation specialist may give you a standard formula that includes a multiple of adjusted earnings averaged, and possibly weighted, over a period of years. This is very helpful for identifying your starting point with incentive and transaction planning. If you’ve completed a formal valuation, are estimating business value, or are not sure how to start, The McFarland Group will help you determine whether your baseline is measured by your performance, or is attributed to your team and their performance.

When you know whether your company value is locked up with you or is measured by the performance of talented people on your team, then you can address strategies for business value growth.

How do you recruit and retain key employees?

If you are like most of the business owners we guide, you aren’t confident in your strategy to retain key employees. You may have incentives to retain employees, but your plan probably doesn’t motivate employees to increase company value. The best ways to retain employees connect rewards for talented people to their impact on growing business value.

Talented people are motivated by clear objectives and meaningful rewards. Strategies to retain key employees include payouts of meaningful rewards over time, or when target metrics are achieved. A well-designed plan is beneficial for retaining key employees, growing the company value, and creating resources for continued reinvestment.The McFarland Group creates meaningful incentive plans for employees and for business owners by linking value and performance. When you know what motivates key employees and how they can contribute to improving company value, then you can create incentive plans that retain key employees.

How do you achieve your transaction goals?

If you are like most of the business owners we guide, exit planning is a problem to solve in the future. You may be aware that most small-business owners need a buyer that can get financing for the sale, but most buyers will need owner financing for some part of the sale. The longer a business owner waits to prepare for a business exit, the more likely the owner will be financing the sale. This means less cash at closing, and more risk following the transfer of control.

Most business owners consider the value of their business as the best, (and, often, only), way to complete their exit plan. Exit planning for business owners is more than how much money they can get from the sale. It’s a combination of succession planning, incentive planning, value creation planning, and business continuity planning which all address components of the dynamic company they own and operate. In order to address all of the components that make up an exit strategy, you need to look at each component for where it’s at and where you want it to be. Once you understand your current state, you can begin to build a plan that meets your transaction goals. The McFarland Group guides business owners to identify the risks and opportunities that impact their vision, and to navigate the route that achieves their planning goals.

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