Every Business Owner Needs an Exit Strategy
Guess what? Nobody wants to work forever. Okay, maybe our idea of retirement has changed from the old notion of kicking back and doing nothing. Especially if you’re active, you’ve invested well, and now is your chance to live out new dreams. But what happens when it’s time to exit the business…and you OWN the business?
I recently spent a day at the Manhattan Club in New York City as a guest speaker for the Exit Planning Institute at its Exit Strategy Summit. This organization was created by a successful investment banker who, after helping more than 100 business owners sell their companies, saw a need to help more business owners, in general, who were considering ways to exit the business.
It’s a topic that’s dear to me personally and professionally as an owner and investor in The Dwyer Group parent company and as a witness to more than 2,600 franchise owners across our service brands in 11 countries around the world.
Simply put, in the world of franchising across Dwyer Group service brands, exit strategies are actually a key attraction to buying into our businesses in the first place. The thinking is simple. You may want to invest in a franchise opportunity and be your own boss. But what about when it’s time to retire, ride off into the sunset, and hopefully enjoy the fruits of your labor? The fact that you are part of a proven brand that has name recognition that is more powerful than a mom-and-pop business in that same industry gives you great leverage when it’s time to exit the business. And although people become emotionally invested in the businesses they run, we can dispel some myths when it’s time to pass the ownership to someone else.
Mythbuster #1 – Nobody will take care of the business as good as you will.
Thank goodness there is a thing called succession planning. Because as good as founders, CEOs, presidents and business owners are – they are also mere mortals. If that’s you, and you are good at your job, then the idea that your company will outlast you is a total possibility – the kind that deserves a plan. And if you plan to exit the business, sell majority ownership, or pass the reigns in whatever capacity, the right strategy can benefit both parties.
That journey has been true for The Dwyer Group as well. When our leadership team was looking to take the organization from a publicly-traded company to a privately-held entity, our exit strategy was finding the right private equity partner to take majority ownership and simultaneously help us take the parent company and its service brands to the next level. Sure, we felt like we knew the business better than anyone. But the right PE partners have proven monumental too. They have provided capital, national and international business resources, access to industry experts at all levels, and counsel to constantly improve our systems.
Truth be told, we did know the business well. But our PE partners also helped us grow beyond our wildest dreams with investments in our infrastructure and support, acquisitions of other service brands and more. And today Dwyer Group is an international organization with franchise owners that account for more than $1.4 billion in annual system-wide sales.
Meanwhile, for me personally, I also exited the CEO role over time. Today, I serve as Co-Chair of Dwyer Group. And Mike Bidwell has risen from the ranks of franchise owner, to multi-concept franchisee, to brand president of several Dwyer service brands, COO of Dwyer Group, and now the President and CEO. In his role as CEO, he has grown Dwyer Group more than 50% in the last couple of years.
Mythbuster #2 – It’s not just about the bottom line. Values deliver value.
Getting ready to speak at the Exit Strategy Summit with Pam Hendrickson, COO and Vice Chairman of Strategic Initiatives at The Riverside Company.
At the Exit Strategy Summit in NYC, I was honored to be invited to share the stage with Pam Hendrickson, Chief Operating Officer and Vice Chairman of Strategic Initiatives at The Riverside Company. Pam and I have had a wonderful relationship for as long as Dwyer Group has been a part of the Riverside portfolio of companies. And that includes being sold by Riverside to the TZP Group for a wonderful ROI…and then being reacquired by Riverside again three years later.
Those are the financial win-win situations that make for a storybook ending…and storybook beginning. But it’s our Code of Values at Dwyer Group that has helped endear our organization to our private equity partners far beyond the bottom line of the financial spreadsheet. [Read my blog: How Values (Ethics) Deliver Value (Profits)] I strongly believe that our values deliver great value to our investors as well. The Code of Values is at the core of the culture of our business and the subsequent success that comes from that business.
The goal to Live R.I.C.H. at Dwyer Group and across our service brands is as much a part of the business as the money that changes hands with each transaction. Following the themes of Respect, Integrity, Customer focus and Having fun in the process not only attracts new hires to the corporate team, new franchise prospects to our service brands, and new customers across the front lines of those businesses – but it also attracts PE partners to a company.
We don’t profess to be a perfect company, but we work hard to do our best every single day. And that speaks volumes to PE partners who look for transparency, honesty and a strong foundation to build upon in any capacity.
Mythbuster #3 – If you got hit by a bus, everything would stop.
Sorry, friends. As vital as the leader is to a business, the got-hit-by-a-bus syndrome doesn’t always ring true. Unfortunately, we made this journey the hard way when Don Dwyer Sr., the founder of Dwyer Group, passed away at the age of 60 without a formal succession plan in place. We had the hard task of mourning his loss as a family, as a publicly-traded company, and as a business that was most certainly going to move forward without him. Thank goodness he left behind his own Code of Values for the company that helped us find our way.
The reality is that losing a leader is never easy. But planning for the next one is one of the smartest things for your business. The Dwyer Group leadership team has had a keen focus not only on the success of the company today, but the capable and steady success of the company moving forward. Our PE partners have that same interest. And no matter the size and scope of your business and how long you want to call the shots, there’s the chance you may not get to make that decision.
So, think proactively about your exit strategy and the succession plan for your business. Whether it fits nicely into a retirement picture or supports the company’s future in times of unexpected loss, it’s important for the business owner to own this task.