Exit Planning vs. Succession Planning: What Is The Difference? – Knowledge Management

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.