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Going OutIn StyleJohn Brown On Exit Strategiesby Jack ApplemanPhoto byDiane HuntressJohn Brown helps business owners out the door– when they choose to leave. During his threedecades as an estate and business planningattorney, Brown saw how many owners were unprepared forthat ultimate departure from their companies. So in 2003, hedecided to devote his Colorado-based firm, Business EnterpriseInstitute (BEI), exclusively to exit planning.His book, The Completely Revised Howto Run Your Business So You Can LeaveIt in Style, details BEI’s seven-step exitplanning process.Today Brown is building a network ofinsurance professionals, attorneys, CPAsand other advisors to offer exit planning tobusiness owners nationwide. He believesinsurance advisors can drive the exitplanning process – and take their ownbusinesses to a new level. Brown shareshis thoughts with The Edge’s readers.How would you define exit planning?Exit planning is the deliberate, adaptableand customized process that a businessowner uses to leave the company on his orher own terms and timetable.Why is exit planning so critical forbusiness owners?There are more than nine millionestablished business owners in the U.S., halfof whom are 50 years old or older. A recentsurvey of firms with $5 million to $150 millionin revenues revealed that two out of threeowners plan to leave their firms within 101 Source: 2005 survey conducted by Pricewaterhouse Coopers.14 the edgeyears. But more than 75% of them haven’tdone much planning for what probably willbe the most significant financial event oftheir lives. Think of the potential obstacles:huge tax bills after the sale of the business,potential chaos if the unexpected happensto the owner or a key employee, and feudingfamily members, just to name a few. 1How does BEI help business owners withexit planning?BEI helps business owners exit theircompanies in style by training their advisorsin the exit planning process. The exit planningprocess is facilitated through our membersnationwide – insurance professionals, suchas Randy Johnson (featured on The Edge’scover), attorneys, accountants and otheradvisors, all licensed in their states. Any ofthese individuals can join BEI and receivethe education, products, and marketingsupport needed to approach and engagebusiness owners in the exit planning process.We teach them our Seven Step Exit PlanningProcess design process of establishingowner objectives and business value, buildingcash flow, selling to a third party for topdollar, transferring to management or familymembers, developing a business contingencyplan and preserving family wealth.After being trained in exit planning, anadvisor builds a team of specialists in theother disciplines. So an insurance professionalwho joins BEI would then recruit attorneys,CPAs and other specialists.What role can insurance brokers play inexit planning?Of all the professionals a business ownerdeals with, insurance advisors are in thebest position to drive the exit planningprocess – for several reasons. First, insuranceadvisors usually have superior interpersonalskills essential to developing a long-termrelationship with owners. Second, businessowners often feel more comfortable talkingto their insurance advisors – who typicallydon’t charge by the hour – than with othertrusted advisors whose meter keeps runningduring every conversation. Third, life,disability and long-term care insuranceare primary tools used to implementthe planning recommendations. Fourth,insurance professionals are more comfortable
and skilled at working in a multi-disciplinary process, whichis required in exit planning.Which insurance products are typically used in exitplanning?Key-person insurance, buy-sell agreements, deferredcompensation and other forms of life insurance.How is life insurance typically used in exit planning?It’s used as key-person insurance, to fund buy-sellagreements, and in deferred compensation plans. Keypersonis often critical to the exit planning strategy sinceit’s based on the money that would be required to replacesomeone considered essential to the business. If thatindividual dies without key-person coverage, the ownermay be forced to delay his or her exit from the business.That can ruin years of planning in a heartbeat.What kind of opportunity does exit planning offerinsurance professionals?The practice of exit planning can transform aninsurance advisor’s career. By taking the lead inthis process, an insurance professional can shift thefundamental relationships with clients. He or she can movebeyond just supplying a product and offering some adviceto becoming an essential part of the owner’s lifetimeplanning. This can cultivate a long-term relationship thatcan pay off in many ways.Plus, now is the best time to become involved in exitplanning. Think of the millions of baby boomers whoown businesses and are beginning to age and the lack ofadvisors who understand exit planning. We’re looking at amassive opportunity.How does BEI train insurance advisors in exitplanning?Once they join the BEI network, advisors participatein a series of webinars and our intensive two-day bootcamp, which explains how to approach and engage thebusiness owner with exit planning, market their exitplanning process, and create and manage an exitplanning advisor team and the Seven Step design process.Ultimately that insurance professional will be able toposition himself or herself as THE resource for businessowners. Follow-up training continues for the next12 months, which includes teaching advisors’ assistantsto conduct mailings and other marketing activities.For more information, contact John Brown atjbrown@exitplanningforadvisors.com or 888-206-3009.Jack E. Appleman, CBC, is a seasoned insurancecommunication professional with 20 years’ experienceas a PR specialist, corporate writing instructor andcollege professor.the edge 15
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