You have spent years cultivating and nurturing your business, but you also need to start planning for what happens when you leave the business.  A strategic succession plan and exit strategy is invaluable whether you are selling your business or passing it down to family or a key employee. TEC Canada Speaker Tom Deans addresses the importance of having a formal ownership succession plan.

TEC Canada: What is essential for a successful succession plan and exit strategy?

Tom Deans: The very first step in the process is to get a proper third-party business valuation.  If a business owner is thinking that their business is worth $5 million, and the valuation comes in at $1.5 million, that’s a big delta.  A valuation can be both a humbling and conversely, super surprising on the upside. It can set realistic expectations at the front end of the process.  There isn’t an M&A advisor who has nurtured a deal right up to the closing date and watched the deal go south because the seller has no real grounded view about what their business is worth.

The second step in the exit process is for a business owner to do their own homework and research.  Ask business owners who have already sold their business: what they did well, what they would do different and what they deeply regret.  As I reflect on my own exit, the one thing that drives me crazy to this day was that we did not put a monetary value on the points we had collected from all of our corporate credit cards…the asset wasn’t reflected on our balance sheet.  It didn’t amount to a lot of money, but who likes leaving any money on the table?

There are so many moving pieces when you are selling that you need to go into the process well prepared. That also means building a team of outside advisors to help you.  You need an accountant, a lawyer and an M&A advisor who can talk and collaborate with each other.  Please promise me that you won’t try to sell a business like a do-it-yourself-er… the buyer will mop the floor with you. Stated differently —running and growing a business requires completely different skills than selling a business.  Unless you’ve done a number of acquisitions, most sellers don’t even know what they don’t know.

TC: What tends to stand in the way of a successful succession plan?

TD: I’ve spent the last ten years convincing business owners that their business is not their legacy — it is not an easy sell.  Most business owners (Founders especially) believe that their greatest work of art and legacy is their business. Let me ask you a question — who was the Founder of Coca Cola?  Exactly — I know you don’t know.  No one cares — few are curious enough to even google the question.  Coca Cola is the third most valuable consumer brand in the world and no-one cares who its Founder is.  Now consider your business: do you really believe that you’ll be remembered for what you’ve built?  It’s a harsh message to deliver to business owners but a pre-condition for detaching emotionally from the business.  Business owners can be passionate about their business, but never emotional. A business is not your friend, it’s not your pet or even your community. It is an instrument of wealth creation —full stop.

TC: How often should a plan be reviewed?

TD: I believe high functioning business leaders should be reviewing their plan quarterly. No one is inventing new exit strategies. They are:

  1. Do nothing. Die at your desk and leave it to your family or remaining shareholders to sort through the mess you’ve left (incidentally 50% of all Canadian business owners do not have a legal will and therefore, by extension, do not have an exit plan).
  2. Gift your business to your family while you are alive.
  3. Sell your business to a key employee or group of employees.
  4. Sell to a strategic buyer (competitor – supplier) or financial buyer (i.e. private equity).
  5. Employee Stock Ownership Plan (ESOP). Not a big fan, but that’s a separate discussion.

That’s it… no one is inventing new ways to exit a business.  The very best exits occur when the business owner pursues multiple options concurrently.  It’s always fun to watch multiples ratchet up when a private equity firm understands that a few strategic buyers are in the mix and vice versa.

TC: What might prompt a business leader to revise his or her plan?

TD: There are a host of reasons why a plan will be revised — here are a couple main ones:

  1. The business owner suffers a health event.  It’s amazing how focused and motivated they become when they have a brush with mortality.  Smart business owners don’t wait for that moment.
  2. Two or three years of poor financial performance.  Depending on the age of the business owner, some just run out of gas and take anything they can for the business. Sadder still, we know from the data that only 20% of business are actually sold in this country.  The vast majority of business owners who miss the top of the cycle can’t wrap their mind around selling for less than the peak and simply ride their pony to zero.  Too many businesses in this country liquidate because selling feels like the buyer is the victor and seller is the vanquished…. nothing could be further than the truth.

TC: What should a business leader consider as they develop their succession plan?

TD: Unless a business owner has a general sense of where they will go and what they will be after a sale, they will never leave the building.  When a business owner defines themselves by their business, when they derive their status from the business, exiting can be nothing short of depressing.  It’s why so many sellers have regret because they didn’t do their work before selling. Unless a business owner is excited about graduating to a higher purpose than simply making more money (often more than they consume), they are likely to delay their exit.

When business owners have both time and money after a sale (often for the first time in their life), they are afforded something that few ever achieve.  Other business owners will be jealous especially when the business owner who has nailed their exit pivots and does something extraordinary. This may be philanthropy, teaching an MBA course, becoming a TEC Chair or simply learning to play the violin.

The last deal is always the hardest.  But like anything else in business that feels hard and elusive, exiting on your terms can be a deeply satisfying and extraordinary experience. When you make all of your businesses with the end in mind (your exit) you will actually build a business that someone else wants to buy.  That’s not just smart, it’s a great way get rich. If that’s not appealing, then you are probably building one of those legacy businesses where only 3% make it to the grandchildren of the Founders.


Dr. Tom Deans is a full-time professional speaker who has delivered more than 1,000 paid speeches in 25 countries.  His keynote presentations on the transition of family businesses and family wealth have made him an in-demand speaker in the retail, wholesale, manufacturing and financial services sector.  Dr. Deans was the 2009 TEC Speaker of the Year. Information on his books and speaking are available at