The Three Legs of the Stool is the Exit Planning Institute’s framework for a successful exit, representing business readiness, financial readiness, and personal readiness as the three equally necessary conditions for an exit that achieves what the owner intended.
A stool with two legs falls. So does an exit plan that addresses only two of the three dimensions. A business that is financially strong and personally ready but operationally dependent on the owner will be discounted in a transaction. A business that is operationally excellent and the owner is personally ready but the personal financial plan has not been built will produce proceeds that fall short of what the owner needed. A business and financial plan that are both in order but an owner who is not personally ready to let go will produce a deal that falls apart or a closing the owner regrets.
The framework exists to prevent the most common exit failure mode: optimizing one dimension while neglecting the others. Exit planning that addresses all three legs simultaneously, building the business, planning the finances, and preparing the owner personally, produces exits that close on the intended terms and lead to a post-exit life the owner was actually ready for.
See also: Business Readiness · Financial Readiness · Owner ReadinessAll three legs of the stool need to be in place before the exit. See how Wefinx approaches exit planning.