Randy Long on Using 7 Steps to Your Family Business Legacy

Randy Long talks to Alexander “The Engineer” Lim, host of AuthorStory by alvinwriter.com about his latest book, The BraveHeart Exit: 7 Steps to Your Family Business Legacy.



Run the business as though you wanna exit at any time. Always be ready for your exit. ~Randy Long

Randy is a certified financial planner and is a lawyer, has practiced business law and estate planning for over twenty-five years, and has been certified as an exit planner for the past five years or so. He started his career as a financial planner, then went to law school to learn about estate planning, after which he has worked with family businesses. One of his earlier cases was with a family member who had a heart attack and died, but since Randy had helped create a proper exit plan, that family member’s family has been able to live off of the proceeds of such planning for twenty years. His company’s mission is to help business owners prepare for a successful exit from their business, to strengthen the family along the way, and to live their legacy. The BraveHeart Exit was written in support of this mission, to act as a road map for when they finally leave their business. Randy notes that around fifty percent of all present business owners will exit their businesses in the next five years, and seventy percent within ten, and that there aren’t that many people qualified to help them, hence his reason for writing it - that, and the urging of his family relatives who wanted Randy to share his experience with those who would need it.

Randy notes that the best time for a business owner to start planning for his exit is five to seven years prior to that actual date, as a hurried exit could result in some missed opportunities. He also notes that business owners usually don’t know what a saleable business is, as third-party buyers look at a business differently from the way business owners do. The most important part of building a self-managing company is building a good business team that enables the business owner to work on the business, rather than in it. A management team results in a business that is worth more money than one without one, and enables a business to grow faster.

Where percentages are concerned, twenty-four percent of all businesses are sold to the business owner’s children, who would have the potential advantage of growing up in an environment where the business is part of their lives; around thirty-nine percent to the business employees and the remainder to third parties. Randy notes that the nature of the business can also be a factor with whomever inherits it, with farmers being more likely to transfer their businesses over to their own children than not. Some businesses are actually more of a job than a business, such as businesses based around a professional like a dentist or a lawyer, and for these kinds of businesses the leverage isn’t as great as compared to those businesses with management teams.

The exit process starts with three questions that need to be answered: who the business owner wants to transition his business to, when does the business owner want to transition the business and how much does the business owner need from that transition in order to be financially successful during one’s retirement. The next step is to look at the owner’s self-worth and the value of the business. A market appraisal is then done on the business, after-tax-from-sale monies are also calculated, and any gap between what the owner wants and what the business is worth is then estimated. From there, necessary steps can be taken to address that gap, such as creating a management team and growing consistent revenue streams, to enable the business owner to get what he needs by the time he transitions out.

An exit planner, according to Randy, helps a business owner exit his business in a way where the business owner’s own, particular individual objectives are met. He mentioned that one business owner was happy to get three million dollars to retire on, while another got two hundred million dollars. Randy also noted that durability needs to be built into the business, where durability refers to contingency plans to minimize risks should the business owner or others involved pass on prior to the implementation of the exit plan. Among the examples he gave was that of the pop artist Prince, who had no exit plan, which means that his estate’s succession would take years to settle and that the IRS will be the main beneficiary of his death.

Randy Long’s website for his book, The BraveHeart Exit: 7 Steps to Your Family Business Legacy, is randymlong.com.

Purchase on Amazon: The Braveheart Exit: 7 Steps to Your Family Business Legacy by Randy Long