In Walking to Destiny: 11 Actions an Owner Must Take to Rapidly Grow Value & Unlock Wealth, Christopher M. Snider, CEO of the Exit Planning Institute, seeks to help business owners “unlock the wealth” trapped inside their businesses (p. xiii), emphasizing to these owners life’s important lesson that ultimately an exit from their businesses is “inevitable” and “undeniable” (p.3).
Snider focuses his attention on today’s estimated six million privately held (and mostly family owned) operating companies in the United States, which generate approximately $30 trillion in sales (p.5). Assuming a valuation multiple of 50% * sales, Snider estimates the value of these businesses at approximately $15 trillion.
Individuals born between 1946 and 1964 own nearly two-thirds of these privately held businesses (p.7) and according to Snider, such businesses often represent an owner’s most significant asset, frequently comprising more than 80 percent of the owner’s net worth (p.4).
Snider cites the Exit Planning Institute’s State of Owner Readiness Survey showing that 76 percent of these business owners would like to transition within the next 10 years, while 46 percent would like to transition within five years (p.7). The challenge facing individuals planning such exits is that “…only two out of ten businesses that go on the market will actually sell,” and among “… those that sell, many will receive a lower multiple due to factors that include poor or nontransferable intangible assets.” (p. 7). In addition, for those businesses planning instead for an internal family transition, only about 30 percent have success through the second generation (p. 7).
Snider observes how many individuals end up unhappy following the sale of their businesses despite then having significant funds available for other pursuits. As a result, Snider does not view exit planning as a narrow, isolated activity, but rather more like a three legged stool aligning personal, financial, and business goals (p. 55).
The first of Snider’s 11 recommended actions is for owners to adopt a paradigm whereby their business strategy integrates fully with their personal and financial objectives. His second recommended action is closely tied to the first, namely to ensure personal and financial goals drive the business, and not the other way around (pp. 47 48).
Ultimately, Snider believes there are three key issues for an owner to address in executing a successful transition: maximize the value of the business, prepare personally and financially to maximize benefits derived from the exit event, and make sure to have a plan for what to do next (p.135).
The text provides practical tools to help the business owner, including a 10-step survey to gauge how well prepared (or not) the business is for a successful exit (pp. 218 -219) and an easily understood table introducing pros and cons associated with various exit alternatives, including sale to a third party, intergenerational transfer, recapitalization, etc. (pp 222-225). For those businesses not yet prepared for an exit, Snider offers his Value Acceleration Methodology to help improve the organization’s prospects. These various tools are coupled with Snider’s practical advice to revisit every 90 days the critical Grow versus Exit alternatives (p. 211).
To the book’s credit, it does not attempt to provide a “how to” manual for selling a business. Nor does the book attempt to replace the array of technical experts, including attorneys, CPAs, etc. needed to effect a successful transition. Instead, the text’s strength resides in helping the seller to prepare the business for the exit transaction and guide the seller in understanding and implementing the exit process, while preparing the seller personally to maximize benefits of a successful transition.
