Leadership1 publisher3 min readPublished
An Exit Planning Institute column puts five triggers behind half of all owner exits
The Exit Planning Institute's 5Ds framing holds that a spouse or child gets only what a founder wrote down, and the column's own remedy is a values conversation, a standing family meeting and a spoken deal about a warehouse.
The Board Room · Leadership desk
What happened
- A contributor column in Entrepreneur by an Exit Planning Institute insider puts five triggers - death, disability, divorce, distress and disagreement - behind roughly half of all business exits.
- The same piece states that business owners nationwide have not done a good job of preparing their families for an exit, whichever of the five arrives first.
- Its stated remedy pairs a regular cadence of family meetings with good documentation as the combination that prevents family strife.
- It also argues the first family conversation should be about values, and that ownership percentages, inheritance structures and financial distributions are important but not foundational.
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Why it matters
- constraint Authority and information end up in different hands after a trigger: the spouse or child who can sign is the one who was never given the terms, so the earliest and least reversible decisions get made by interpretation.
- decision The choice in front of an owner is which parts of intent to commit early, because naming a successor in writing settles a question years before the founder has the evidence to answer it well.
- contradiction The column's case rests on documentation, and its own example of transferring an expectation to the next generation is a spoken bargain about cleaning a warehouse. That makes paperwork necessary at best and not sufficient.
In the first week after a trigger, the column says, the people who must decide hold authority and no instructions. A spouse is left making decisions the author calls impossible, the children interpret intentions, and advisors fill in the gaps [6]. The author locates the cause in information, not affection. "families rarely struggle because they lack love for one another. They struggle because they lack clarity," he wrote [5]. His test for a plan is whether the answers are already on paper: "when a crisis occurs, your family doesn't get access to what's in your head. They get access only to what's in writing" [4].
The roughly-half figure arrives with a byline inside the organisation that uses it. The author writes of the Exit Planning Institute in the first person plural and says he owns a business with his dad [12], and Entrepreneur prints its standard note that "Opinions expressed by Entrepreneur contributors are their own" [11]. On what this column shows, a practitioner's count of what causes exits is not a base rate to plan a board calendar around. As stated, the figure is about what caused an exit. The step from unwritten intent to a bad exit is the author's judgement, drawn from what he describes as talking with thousands of business owners and their advisors throughout his career [10].
If the figure holds, the other half of the distribution matters just as much. If the 5Ds cause roughly half of exits, roughly half happen on terms the owner set [16]. The two halves reward opposite behaviour. On the planned side, a quarter of delay costs little and the information improves, because the founder learns which child can actually run the business. On the unplanned side, someone else sets the date. An owner deciding this quarter is trading information against availability: waiting produces a better answer, and it may produce it after the answer was needed.
The column's illustration of how legacy gets taught is a warehouse holding memorabilia from generations of Snider family entrepreneurs, documentation of 21 years of EPI, and a classic car collection the author's son loves [13]. The terms were spoken. If the son cleans the warehouse every time the author thinks it needs cleaning, he gets the contents one day, and the following week the author found him there unasked, in hour three of mopping the floors [14]. The column does not say that deal was written down.
For an owner with something to decide this quarter, the prescription splits by cost. The column opens by listing what owners already know: where the important documents are stored, which child has expressed interest in the business, and what should happen on retirement, disability or death [18]. Writing that down leaves every option open. Setting ownership percentages forecloses a great deal, and it is slower work. The column treats both as one exercise on one clock, on the grounds that "A legacy plan is not an end-of-career exercise." [7]
What to watch
- Whether EPI publishes the sample, method and date behind the roughly-half figure.
- Whether any study links a founder's documentation status to how contested the eventual exit became.
- Whether the recommended family-meeting cadence gets specified: how often, who attends, what is recorded.