Lessons from Herman Cain and Penn State - Part II
Last week we discussed the scandals caused by the alleged actions of Herman Cain and Penn State and those around them. This week we'll look at the consequences and implications of these, how you need to evaluate your business and how to begin crafting solutions for your Exit Plan,
Identify the Consequences
What happens if you don’t reach each of your objectives? Have you carefully considered and prioritized each objective? Do you know which ones you can sacrifice if you must and which you cannot? Had Herman Cain clearly identified the consequences of not properly managing what was inevitably going to come out, would he have handled it differently?
There are no perfect human beings – all have flaws. If Cain had simply come out and said yes, this happened, I discussed it with my family, took responsibility for my actions and sought help, would the press have continued to make it front page news or would the issue have quickly blown itself out? What is his Exit Plan now?
Evaluate your Exit Plan in place for your business?
• Do you know what your business is worth?
• Do you have a financial plan in place that identifies what you will need to get from your business in order to sell on your terms?
• Have you done pre-diligence on your business to find weaknesses and clearly put a value on the consequences that they may result in?
• Do you have tax issues that have been sitting on the books for years that will have to be taken care of at sale?
Quantify the Implications
What will the consequences of your actions or inactions cost you? In the case of Penn State they are incalculable. Criminal and civil liabilities, both individually and for the University cannot be quantified. Other individuals and institutions will be implicated as the story unfolds. One thing is certain – Penn State will forever be known as the institution that allowed this to happen. What do you suppose that does to their value to the community?
What are the implications you face by not preparing for the transition of your business?
• Significantly reduced value;
• Inability to retire the way you had planned;
• The legacy that you had worked so hard to leave your family not being achievable;
• Tax liability for you and your estate that could be minimized by working with your CPA and financial advisor prior to the sale;
• Your ability to exit at the age you want may not be realized.
• You may not be able to exit at all if you have not properly prepared the company financially and operationally for ownership transfer.