26 April 2024

Exit Planning vs. Succession Planning: What Is The Difference?

IR Global


IR Global is a multi-disciplinary professional services network that provides legal, accountancy and financial advice to both companies and individuals around the world. Our membership consists of the highest quality boutique and mid-sized firms who service the mid-market. Firms which are focused on partner led, personal service and have extensive cross border experience.
Both succession planning and exit planning are critical roles, each serving different purposes for businesses and their owners.
United States Strategy
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Both succession planning and exit planning are critical roles, each serving different purposes for businesses and their owners. The decision to be a succession planner or an exit planner depends on an individual's skills, interests, and objectives. Here are some reasons why someone might choose one over the other:

What is a Succession Planner?

Long-Term Relationship Building: Succession planning involves working closely with business owners and leaders to ensure a smooth transition of leadership within the company. Succession planners often develop long-term relationships with the owners and their families.

Focus on Business Continuity: Succession planners focus on preserving the legacy of the business and ensuring its continuity beyond the current ownership. They aim to identify and develop potential internal successors to fill key leadership roles.

Expertise in Leadership Development: Succession planners need expertise in leadership development and talent management to identify and groom potential successors, ensuring they are adequately prepared for their new roles.

Emphasis on Family-Owned / Privately Held Businesses: Key to the definition of "family;" family is not limited to just those who are blood-related. Familial bonds can be created amongst partnership and long-term loyal employees. As such, succession planning is especially relevant for family-owned or privately-held businesses, where the process involves addressing family & interpersonal dynamics, and intergenerational issues, and ensuring a smooth transition of power

Alignment with Business Growth: Succession planners work towards aligning the personal and business goals of the owners and the future leaders, fostering a harmonious transition.

What is an Exit Planner?

Focus on Business Sale or Transition: Exit planners concentrate on helping business owners sell their businesses or transition them to new ownership. Their primary goal is to achieve a successful exit for the owner, maximizing the value of the business.

Financial and Tax Expertise: Exit planners need to be well-versed in financial matters and tax implications related to business sales, mergers, or acquisitions.

Shorter-Term Engagements: Exit planning engagements typically have a defined timeline, often culminating in the successful sale or transfer of the business. This may be appealing to individuals who prefer shorter-term projects.

Market and Industry Knowledge: Exit planners require a deep understanding of the market and industry dynamics to position the business for a successful sale and attract potential buyers.

Maximizing Business Value: Exit planners focus on implementing strategies to enhance the business's value, ensuring it is attractive to potential buyers or investors.

Ultimately, the decision between becoming a succession planner or an exit planner depends on an individual's expertise, interests, and desired level of involvement with businesses and their owners. Some professionals may find fulfillment in ensuring the continuity of a business and working closely with its stakeholders, while others may enjoy the challenge of orchestrating successful business sales and navigating financial complexities. Generally, due to the role a succession planner plays as it relates to the long-term continuity of a business; succession planners tend to have more long-term and deeper relationships with clients versus Exit Planners whose relationships generally end at the time of the transaction. Both roles play essential parts in the life cycle of businesses and can bring value to the clients they serve.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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