Chapter 14
Exit Strategies
Nothing Is Forever
Building Equity
At some point you will leave your firm or it will leave you. We know this. So you might as well prepare for it!
In this first segment, we’ll discuss building the worth and value of the firm—the equity. If you recall, there are two models that are desirable in this business.
Model #1: The solo practitioner, who has no full-time employees, has relatively few physical assets, may not have an office that is owned outside the home, and takes virtually all profits out of the firm yearly to use personally.
Model #2: The boutique firm, which you own and which has physical assets such as an owned office, employees, and infrastructure, and where the owner invests a proportion of the profits back into the business each year in the form of salaries, benefits, expansion needs, and so forth.
I’ll talk about building equity for both models here, and you can apply what is most applicable to the type of practice you have built or are building. Bear in mind that it’s never too early to begin planning for high equity, but it can be too late. And, as I admonished earlier, confusing these two models will lead to disaster in most cases and seriously undermine equity, since no one wants to buy a flying goat, no matter how nice the wings look that you’ve strapped onto it. If you try to force it to fly, you will simply wind up with a very unhappy goat.
The Gospel
You can start building practice or firm equity from the first day. The problem ...
