Business Strategies for Divorce, Disabilities, Departing, and Death

exit-planning-4-dsA lot of Exit Planners and business transition consultants talk about the 4 D’s of business Exit Strategies.  Depending on who you talk to, the 4 D’s are usually divorce, disability, departing, and death.  These may be catchy and easy to remember, but It’s very difficult to take the whole discipline of Exit Planning, Succession Planning, Continuity Planning, and all the others and boil them down into four simple words.

Let’s take a look at each of these words and see how important they really are.  First, let’s look at divorce.  I know many business owners that have survived a divorce and were not forced to exit their business. So how important is it to make the possibility of a divorce part of your Exit Plan?  That’s one question that no outsider can answer, but for most of my clients the task of creating a contingency plan in case of divorce is just not that high on their priority list.

How about the second D in the 4 D’s of Exit Strategy — “Disability.”  I recommend that every business owner have an emergency Exit Plan or contingency plan in case of some unforeseen occurrence.  But I recommend that this plan encompass much more than just addressing the consequences of disability for the business owner.  An emergency Exit Plan should also cover your partners and all of your key employees.

This type of planning can help you in situations that go beyond disability.  For example, if you ever want to transition out of the company at some point to enjoy the fruits of your labor, then having some type of continuity plan will be of great help.  In addition, having a detailed Exit Plan will also create a more stable management team and add value to the company if you ever decide to sell the business to a third party.  If you meet your death before your time, this type of planning will help your business survive your untimely departure.

Even though the chances are pretty slim that you will exit your business because of disability, it makes sense for other reasons to have an emergency Exit Plan that includes that possibility.  (For more information on this topic see my earlier post titled: Contingency Planning – An Important Part of Any Exit Plan)

Tune in next time for the last two D’s of planning your exit.


About Gary T. Brooks

Gary T. Brooks has over 27 years of experience in the investment banking industry and has been involved in over 100 transactions. He is currently the CEO of ExitPlanPros, where he helps business owners grow their business while planning their exit.

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