Exit to the Right

By Deb Weidenhamer

Succession plans, reverse mergers, acquisitions and employee buy-outs are all terms that make those of us running successful businesses cringe. From the very moment you first start an auction firm every professional you encounter inquires about your exit strategy. And it’s difficult when you first open your doors to plan for how you are going to close them sometime in the unknown future. It always seems so far away that 3, 7, 10 and 20 year plan, but it gets closer as each day ticks away.

Although my only plans for the near future are more acquisition oriented, I can see the need to have good back-up strategies in place. The best place to start is to look at today. You have just been disabled in a terrible accident and you will not be able to work in your firm for at least a year. You are in such terrible shape that you won’t even be able to speak for six months. Now what? Is your family going to be in desperate straights or is your emergency plan going to kick into place?

First you need a next in line – the captain that can take the wheel while you recover. This could be one or two or even three key people that can handle all the responsibilities for which you are currently the individual contributor. Yesterday had you known you were going to be incapacitated, what would you have told them? And I am not simply referring to the big picture high level details but the most basic points like passwords, locations of keys and telephone numbers. It seems so simple but if they are needed and aren’t readily available each moment can mean loss of revenue.

I know that many of the auction companies in the United States are multi-generational family operated enterprises. So for those of you in that circumstance there is false sense of security that the business will go on. However have you ever stopped to evaluate the real skills of the family that works in your business? If you weren’t related and were assessing your family member for an operations manager position or a Vice Presidential post, would you even consider their skills being appropriate for your business needs? If there is even a doubt when you answer this question, then you must begin your disaster preparation and approach it in the same manner as those of us who run without related employees.

Simply start with a list of everything you would want someone to know if you weren’t going to be around. The most helpful lists are those you have prepared in the past when you were leaving on an extended vacation. Make sure all your passwords are documented in a very safe place (not on your computer), label all of your keys and make a list of everyone that would need to be contacted immediately if you were unable to work. Prepare a script of what you want important contacts to be told I your absence, what would these important people find reassuring at this difficult time?

Create a checklist of all the duties that you currently perform and along with the list a name of the person (other than you) that knows the most about that specific task (if there isn’t anyone than I suggest you don’t have enough back-up). Go to the people on your list and ask them what additional information they would need in order to handle the tasks on your list if you were not available. Compile all the information and store it in a central location that is secure but is accessible by a few trusted individuals. This is the first step in preparing to exit your company.

Some of you may find this a grim task and are superstitiously leery of the preparation, but if you know Murphy’s Law, then you will be comforted in the preparation won’t be needed if it is complete. Knowing how you are going to exit is critical in establishing a peace of mind for you and your staff and only actors exit left, you want to make sure you exit right.