Tom Valone likens the exit strategy process to Paul Simon’s hit song “50 Ways to Leave Your Lover.”

Valone, owner of the Great Outdoor Provision Co., announced earlier this month that four members of the store’s management team would acquire the business that Valone co-founded in 1972. The decision came, he said, after Valone spent several years exploring different options.

Valone’s sons don’t want to take over, he said, and an employee stock ownership exit was expensive and required a leader to remain in place. Private equity firms, which had been contacting him for years, were not an option.

“Everyone I spoke with who went (with a private equity firm) said it was a blood bath on their valued staff,” said Valone, 62. “It just didn’t feel good.”

Valone’s expects his physical exit to take about three years and his financial exit to take about 10.

Valone’s foresight and planning isn’t the norm, said Rob Alexander, a partner with Raleigh accounting firm A.T. Allen & Company.

“The guy that doesn’t have a plan is a whole lot more common than the guy who does,” said Alexander, who is Valone’s accountant.

Christopher Snider, president of Exit Planning Institute, an organization that provides education to advisers who work with owners leaving their businesses, said most people don’t give themselves sufficient time to properly plan.

As a result, owners sometimes regret the decision to sell, or realize that they could have made more money on the sale. Also, many owners aren’t financially prepared for the loss of business income and end up going back to work, Snider said.

Boomers stepping down

About 60 percent of privately owned businesses are owned by baby boomers, Snider said, and about 10,000 baby boomers are retiring every day.

“It is just inevitable that over the next 20 years, 60 percent of the businesses are likely to transition in some way,” Snider said. “In that kind of a situation, only the businesses that are in good shape, that have taken time to minimize risk, and have taken the time to make themselves attractive are the ones that are going to sell.”

The majority will end up liquidating, the least favorable option, or selling at a significant discount, Snider said.

The Exit Planning Institute advises using a process that involves aligning the owner’s personal, financial and business goals, Snider said. Stakeholders and advisers, such as a tax specialist and attorney, should be included. Also a professional evaluation and independent assessment of the attractiveness of the business is needed. The assessment helps determine if the business can be sold, and what can be done to enhance its appeal and price.

“Then what we would advocate is a period of time where the owner is getting themselves and the business ready,” Snider said.

Most exit plans take from three to seven years to complete, including a year to get the business ready and a year to go through the transition process. Also, in most cases, owners have to finance about a third of the transaction, which could add three or more years, Snider said. Tax and business strategies, such as demonstrating earning power through financial statements, could take one to three years to execute.

“Through proper value enhancement strategies you can increase the value of your business by at least one to two times your cash flow,” Snider said.

After the initial exit process, it’s time to determine sale options, Snider said.

Inside exits involve selling to employees or family. Outside options include strategic buyers such as a competitor or someone in the same line of the business, or a financial buyer such as individual or a private equity firm.

“Your last option is what we would call orderly liquidation,” Snider said.

Harry Pollock, 65, owner of Varsity Men’s Wear in Raleigh’s North Hills Shopping Center, is undergoing an orderly liquidation. Pollock started exploring retiring about two years ago, but wishes he had started sooner.

“I probably didn’t get my oars in the water soon enough,” Pollock said.

Pollock’s sons aren’t interested in taking over the business that was founded in 1954, and an out-of-town business broker wasn’t able to sell it.

So late last year, Pollock announced he would sell his inventory, and Varsity Men’s Wear would close in April.

“I am going to retire and all of the staff is going to retire with me,” Pollock said.

Seven stores

In 1972 Valone and two partners acquired The Trail Shop, an outdoor store on Chapel Hill’s Franklin Street. One parner was bought out within the first year, and Valone split the business with the other partner in 1982.

Valone ended up with two stores in Raleigh and a half-interest in a store in Charlotte. He renamed the shops Great Outdoor Provision Co.

Now, the business has seven stores and about 150 employees, Valone said.

About 10 years ago, Valone realized that he was getting older and would have to make a decision about the company’s future.

He attended a seminar on employee stock ownership, but didn’t like the costs, structure or regulations.

“It wasn’t really quite the bed of roses that it sounded like,” Valone said.

Private equity groups promised not to tear the company apart, but Valone didn’t believe them, he said.

About two years ago, Alexander suggested that Valone sell Great Outdoor Provision to his management team. Alexander had noticed that Valone was more relaxed than usual. Valone attributed it to his management team.

In the summer of 2012, Valone asked managers Molly Cherry, Travis Zarins, Bill Mauney and Chuck Millsaps, to buy the company.

“They were kind of shocked,” Valone said.

Under the deal, Valone remains chairman of the board and Millsaps will serve as the company’s new president. As Valone’s time at the office diminishes, and the new owners’ time and responsibilities increase, they will get paid more. That money will be used to cover “a good deal” of the capital, Valone said.

“These people have the same passion for the outdoors, and they have got the same passion for this company that I have,” Valone said. “That is a blessing as I see it.”

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