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When I began my career here nearly 30 years ago, many of MNP’s clients, like me, were in start-up mode. Over the years I’ve watched industry, legislative and economic changes impact their practices and ours – sometimes quite profoundly. I have had the privilege of helping to guide many of those practices through successful exit or succession planning following satisfying and productive careers. In addition, I’ve come to understand how life changing events such as critical illness or disability, untimely death, divorce, remarriage and second families can change the dynamic of a professional practice.
Planning for both the inevitable and the unthinkable is the key to the survival of any business. The unthinkable or unplanned can be addressed by undertaking contingency or emergency preparedness planning to identify those critical elements of the practice which could immediately lead to a significant loss of enterprise value.
Beyond the unplanned events, all professional practices need to be consciously planning for their exit. According to the survey of a major Canadian bank, however, while half (550,000) of all small- and medium-sized Canadian business owners are poised to retire by 2022, only 40% of those aged 55 to 64 have a formalized plan that will allow them to successfully exit their businesses. Professional practices constitute a considerable number of those businesses and would contribute to negative impacts on the Canadian economy where proper planning is not undertaken.
It is important for practitioners who envision their practice exit in a carefree and financially secure manner to understand that the requisite planning is a process which, if properly undertaken, requires time – typically years, not months.
Time is needed to collect and analyze inputs of various types, both personal and professional, and to conduct meetings with the different stakeholders in order to create a comprehensive action plan. Time is needed to build and maximize the value of the practice so that the professional may fully realize that value upon exit. Time is required to ensure tax minimization strategies are effectively in place. And time is especially needed to ensure all family members and key employees are ready, committed and aligned with the professional’s strategies.
While our approach, ExitSMART™, is a comprehensive process, it begins quite simply with us working with the professional to address four basic issues:
The process itself is rolled out in manageable stages which are detailed and coordinated with the professional.
Our role is that of a quarterback, one who works with the client – from beginning to end – to coordinate the work of other advisors, bring reliable information and options to the table, and ensure that nothing is missed that could cause problems in the years to come. We help the professional understand how to identify issues, needs and opportunities and to assess the optimal strategies. We also assist our client in formalizing an action plan to move them from where they are to their desired result, and then to implement the plan in conjunction with their team of professional advisors. The client remains in control throughout the process and makes all decisions.
As a professional, you must strategically plan for exit from your practice at an early stage. A casual conversation with your advisor at MNP about ExitSMART™ may provide both the initiative and the understanding you require to move forward.
Jim Chagnon, CPA, CA, TEP is a Partner and Business Advisor in MNP’s Burlington office and a member of the firm’s Professional Services group. Jim works predominantly with owner-managed businesses and professionals to help them capitalize on opportunities from growing their business to retirement and estate planning. For more information about exiting your practice on your terms, contact Jim at [email protected] or 289.293.2311.
Related Topics:ExitSMART™; Dentists
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