Long-Term Planning for Orderly Succession (Exit Planning)
The two partners of a successful 25-year architecture firm recognized that, while they had no desire to exit the business in the near future, it would be prudent to begin laying the groundwork for succession—and identify, incentivize and hopefully lock-in the firm’s future leaders. They retained us to educate them and their top four associates on the options available to them, the pros, cons and mechanics of an employee-based buyout plan, and create a roadmap for the gradual transfer of ownership.
The TobinLeff Solution
After interviewing all of the firm’s stakeholders to determine their personal career and financial goals, we estimated the current and future values of the practice, and discussed with the owners the options available to them. We recommended a three-phase approach, with the initial shares to be discounted and offered to the associates on a partial bonus basis in recognition of their contributions to the firm. We presented the offer, illustrating for the associates what their investment could mean to them in the future. Three of the associates accepted the offer and are now full partners, and we are currently working with the client to map out phase two of the transition plan.