Driving Miss Daisy is a wonderful movie with Hoke (Morgan Freeman) changing from a chauffeur for Miss Daisy (Jessica Tandy) to a lifetime friend and companion. Most entrepreneurs/business owners remind me of Hoke; they drive their business into creation, growth, and profitability. When it comes time to plan their exit, most business owners have a hard time becoming Miss Daisy. They need to turn over the wheel and have a hard time not doing just what is needed to achieve their nest egg goals.
In Exit Planning: The Definitive Guide, John Brown, CEO of BEI, points out the value of becoming Miss Daisy. In 30 years of helping business owners develop exit plans, Brown has identified the number one value driver most sophisticated buyers look for: Next Level Management. Without it, the value a seller seeks is discounted heavily, or no offer is even made.
Next level management refers to managers that have “been there, done that.” They have the ability to drive value to the next level of performance. They are expensive and a bargain at the same time. They cost more than the owner is used to paying, but when they improve cash flow often 100-1000% over 5 years, they more than pay for themselves. More importantly, they have the ability to raise the cash flow based purchase multiple as well.
The key to giving up the wheel is realizing that you not only arrive sooner at your financial destination but you can also see a lot more from the back seat. Time for planning and strategic development becomes available. And you arrive more refreshed.
So when you realize in your exit plan that you need to grow to the next level to retire with the financial security you deserve, think about Hoke and Miss Daisy. Giving up the wheel may be the best decision you ever make.