Is a Business Exit Consultant Worth the Time & Money?

“Is the money, time and distraction of an Exit Planning Consultant really necessary? And does it really add any value at the end of the day?” 

Aaron Toresen, Managing Director, LINK(NZ) poses those questions and  answers them in his LINK Business email Newsletter 14 May 2013.  

In answer, he baldly claims: 

“The truthful answer is only occasionally. More often than not the whole "Exit Planning" nonsense is no more than fee generation by well meaning but ultimately misguided advisers.” 

“Almost every business consultant, coach, or mentor has screeds of information, manuals and guides that they will happily take a business owner through, on an hourly rate, to prepare them for the sale of their business. The more complex and esoteric the adviser can make the process, the better. Often these advisers have never sold a business or indeed owned one, but nevertheless confidently march their clients through various business plans, strategic plans, checklists and milestones . . . . . .”

It turns out these claims are mainly a straw man for then claiming that his firm can prepare a business for sale in within 2 or 3 months.

What he doesn't say is whether those businesses sold for their full value to the exiting owner. The truth is, very probably not. 90% of businesses sell for less than half what they’re worth to the exiting owner. 

A broker’s main interest is typically efficiency of effort to achieve increased turnover, not selling price. Most brokers want you to sell within four months for whatever the business will fetch. They want you to be grateful that they found you someone who's willing to pay to take your place in the hamster wheel.  90% of the time that’s what business owners do. Brokers typically depend on it. 

However, he is right about most business consultants, coaches and mentors. That’s why, if you really do want to sell for an earnings multiple of 4-6 you need to be particular about your choice of help (and your broker). 

You’ll need to establish a profitable growth curve and extract yourself from the centre of operations. Unless you've already achieved that, it’ll be impossible to achieve in 2 or 3 months, even with Aaron Toreson's personal help.  

The project will take at least two years with business-savvy, trustworthy people helping you lead it. They’ll be educated, experienced business owners with wisdom, passion and expertise to share. They'll quickly, deeply understand you and your business, empathise with your situation and work comfortably within the messy reality of your business.  

The project isn't so much about planning as it is about acting strategically;  about changing the way your business is organised and operated; so that you have time to work on it instead of only in it. 

By the time you complete the project you may have changed your mind about selling because the business will be a profitable pleasure to own. 

So don't sell yourself short. You and the nation need you to realise the full value in your business and for it to continue to flourish for it's new owner. 

Take care in selecting your strategic change support and your broker. 

Sailboat does 40 knots in 25 knot breeze. Why?

Collaboration is good if you’re not in a hurry. Yeah, right (Not). Surprisingly for many, collaboration is essential when you're in a hurry to win.

Take for example the speed of the New Zealand team in designing and proving its AC72 hydrofoil catamaran (a sail boat, but not as we know it Jim) for the 2013 America’s Cup in San Francisco. Amazingly, the cat can do more than 40 knots in less than 25 knots of breeze. But more amazing than that is the speed of their development programme.

It’s especially amazing to dyed-in-the-wool corporate managers like former Energy Company CEO and now corporate Chair, Keith Turner. (Keith Turner. Innovation the key for Team NZ. The New Zealand Herald, Thursday May 2, 2013)

To his conventional corporate eyes, it’s miraculous:

“The speed of learning that [NZ’s] team has generated in transforming an idea into world-leading practice is quite extraordinary”

“The culture of the team is outstanding”.

“I was also amazed to see a team assembled from all corners of the world, working on a common cause like there is no tomorrow. Designers from the world's leading experts coming together, not just for money but to participate in something truly great but with a tremendous sense of humility. That is a great lesson for corporate learning.”

To my eyes what he describes is the power of collaborative learning; failing fast and falling forward in unity. My question is how do they get to be like that; why do they behave so differently to common corporate practice?

Turner seems to pay attention to the “what” and make assumptions about the “why”. He notices that they “learn on each other’s shoulders” but is unclear about whether that’s because they are committed or that they are committed to collaborating: 

“The sailors, the designers, the weather men are so committed together they are leaning on each other's shoulders working out what they learned the day before, how they can change the design tonight and how they can make the boat go faster tomorrow.”

Awareness of the distinction between commitment and commitment to collaborating can be indicated by adding a comma to the first line of the above sentence:

“the [men] are so committed, together they are [learning]”  

 “the [men] are so committed together, they are [learning]”.

Though Turner notices that the pace at which the team “catapult their ideas forward” and attributes it to an “extraordinary learning culture”, he seems to attribute that culture to the usual suspects: commitment to purpose and “extraordinary leadership”: 

“The team has been able to catapult their ideas forward at such a pace, despite the multitude of cultures present, to innovate, to spring off each other's dumb questions and to learn so quickly that in three years they have gone from knowing virtually nothing about AC72s to being now one of the best in the world. What an extraordinary learning culture.”

“What extraordinary leadership to engender such culture. Grant Dalton lives with his heart on his sleeve. He's frank, he's unassuming and he's driven. He's intense. Dalton is very much a what you see is what you get and no frills. He has welded a world-performing team together in an incredibly short space of time to achieve extraordinary performance.”

Are commitment to purpose and extraordinary leadership sufficient to replicate such fast and effective learning? I don’t believe so. In order to replicate this exceptional learning organisation we need to go much deeper than simply describing purpose and leadership.

We must delve into questions like, where does this cultural ability to spring off others’ dumb questions come from, and how do we learn to do it? How is that ability related to the leader’s candour? What is it that bonds the team? Did the leader “weld” them together or is the bonding much less rigid, less orderly and less mechanical? Much softer, fuzzier and flexible, yet far more powerful?

To transform organisations to achieve like Team NZ it’s not enough to describe and understand the general effect and generalised causes. We must learn to perceive and behave in specifically different ways from the way we normally do in organisations. The difference is fundamental. Unless we begin to personally experience changed behaviour, even our understanding is unlikely to go beyond conventional corporate perspective such as Keith Turner’s – we won’t have a clue what it might feel like to be in Team NZ let alone how to do it ourselves.

The guys (and girls) in Team NZ have experienced something very different - effective collaboration. They’ll have a hard job communicating that experience to others unless those others get to experience something like it. Until then, there’s nothing much to productively talk about.

The problem is to devise and operate ways to enable people to experience deep collaboration when they have no practicable notion of what it is, having never knowingly experienced it; how to get them to risk attempting something that seems odd, uncomfortable and stupid then collaboratively fail fast and fall forward; how to get high achievers to risk failing in order to learn something that they can’t understand?

The best place to do that is on-the-job; opportunistically in the semi-structured messiness of business, dealing with actual business events. Some educational institutions are beginning to wrestle with this, against the flow of conventional market expectation and against their own institutional cultures, structures and practices. The University of Auckland, Graduate School of Business is one. Having spotted that there’s an international market for business people who can collaborate and generate collaboration, they’re building a practice orientated Master’s programme aimed at doing that.

If it’s going to work, building and delivering the programme itself will be an experiential case in learning to collaborate..