Are You Ready for the Most Important Transaction of Your Life?
Imagine spending decades building a successful business, only to leave millions on the table when it’s time to exit. This isn’t just a hypothetical scenario – it’s the reality for countless business owners who discover too late that their company isn’t structured to maximize value, their operations aren’t ready for transfer, or they themselves aren’t prepared for life’s next chapter.
Consider this: You’ll likely only sell a business once and it’s almost certainly the largest financial transaction of your lifetime. Yet 75% of business owners aged 50 or older who plan to exit within the next decade haven’t taken the proper steps to ensure a successful transition. The difference between a good exit and a great one often comes down to preparation that begins years before the sale.
This understanding led us to create the COMPASS Score – a comprehensive diagnostic tool that helps business owners orient around their preparation to sell and start building a plan to navigate the complex journey toward a successful transition, addressing both business readiness and personal preparation. Visit our page to complete your complimentary COMPASS Score and take the first step toward transition readiness.
What the COMPASS Score Measures
The COMPASS Score isn’t about determining a specific value for your company (that comes later in partnership with an investment bank). Instead, it evaluates whether the necessary work has been done to ideally position your business for eventual exit, if you have a sellable business, and crucially – if you’re personally ready for what comes next.
Our assessment evaluates five critical areas that determine your transition readiness:
1. Business Strategy
- Clear direction for company growth
- Understanding of market value drivers
- Defined competitive advantages
- Strategic planning and execution
2. Business Operations
- Company’s ability to thrive without owner involvement
- Management team depth and capabilities
- Systems and processes maturity
- Operational efficiency and scalability
3. Financial Planning
- Post-exit financial roadmap clarity
- Retirement income planning
- Investment strategy alignment
- Cash flow projections and analysis
4. Estate & Tax Planning
- Structure optimization for maximizing after-tax proceeds
- Succession planning readiness
- Asset protection strategies
- Legacy planning considerations
5. Family Capital & Team
- Personal fulfillment planning post-exit
- Professional advisor team assessment
- Family communication and governance
- Next generation preparation
Transforming Your Score into Action
The journey to a successful business transition isn’t a sprint – it’s a marathon that requires careful preparation and planning. The COMPASS Score serves as the starting point of getting you and your business ready to transition, helping you identify the gaps and get an initial sense for where you need to allocate time and resources.
Before we move forward, let’s take a step back and address the elephant in the room – why should you care about this score? Most businesses are valued based on a multiple of their earnings. These so called “valuation multiples” are often expressed as a range that varies by industry. The difference between closing the gaps identified in the business components of the COMPASS score is often the difference between achieving the low end versus the high end of the multiple range, potentially translating to millions of dollars of difference in the value of your business.
For example, let’s say your business operates with a high degree of efficiency but is reliant on you for sales. The new owner will likely discount your business for this, as they won’t believe that the historical growth of the business can persist without you. If businesses in your industry typically trades for an earnings multiple of 8-10x and your business produces earnings of $2M per year, then losing 2x on your multiple due to the new owner discounting you for lack of a repeatable sales system could result in $16M of proceeds instead of $20M of proceeds, $4M off the purchase price of your business – a huge amount for anyone.
With this in mind, the question then becomes, how do I close the gaps? Ultimately, this comes down to mapping the various issues based on the effort to improve them and the impact in doing so, ideally focusing on the highest impact, lowest effort items first and then working down the list from there. Getting this work done is where most people start looking for silver bullets and ultimately get tripped up either due to the perceived volume of work, lack of understanding on how to prioritize, or being unable to connect the dots to the value of their business. While we don’t have a silver bullet, we do have the experience to help you orient on each incremental step, allocate resources for maximize value, and realize the end goal of transitioning in the best way for you.
Overall, the process of implementing the findings in your score will help you:
- Take strategic action to maximize value
- Implement better systems and processes
- Strengthen your management team
- Align personal financial planning with business goals
Boiling it down, the most important outcome of the COMPASS Score is that it helps initiate crucial conversations you may not have considered. Because business transition isn’t just about the numbers – it’s about preparing yourself, your team, and your family for what comes next.
Your Partner Throughout the Journey
At Panoramic Capital Partners, we’re here to help before, during, and after your transition (see info graphic at the bottom of the article):
- Before: We work with you to understand your COMPASS Score results and develop action plans to address any gaps via our Northstar planning process.
- During: When the time comes, we work alongside you and your team to engage investment bankers, attorneys, and other advisors, ensuring your interests are protected throughout the entire process.
- After: We help manage and grow your wealth for generations to come, ensuring your transition success translates into lasting family legacy.
Take the First Step
Whether you’re planning to exit soon or years from now, understanding where you stand today is crucial for maximizing your future outcomes. Complete your fully confidential 10-minute COMPASS Score assessment today and receive:
- A detailed readiness report analyzing all five critical areas
- A complimentary consultation to review your results
- Actionable insights to begin improving your transition readiness
Visit our page to complete your complimentary COMPASS Score and take the first step toward transition readiness.
Source: Exit Planning Institute’s 2023 National State of Owner Readiness Report
Panoramic Capital Partners (“Panoramic”) is a registered investment advisor.
The information provided is for educational, informational, and illustrative purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. Panoramic Capital Partners and its advisors do not provide legal, accounting, or tax advice. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on market and other conditions. This article may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
The above targets are estimates based on certain assumptions and analysis made by the advisor. There is no guarantee that the estimates will be achieved.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
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