The Other Exit to Think About

GraffagniniThe follow is a post by Mark Graffagnini, Managing Member, Graffagnini + Associates, LLC.


As a startup entrepreneur or investor, you are always thinking about the “exit event,” and the riches that will hopefully come to you from that exit. I am writing today about a different kind of exit—the kind you don’t always want to think about.. There are lots of euphemisms for the end of life—kicking the bucket, to answer the final summons, to buy the farm, to cash in the chips…and, the list goes on. I write this hoping that no one has recently undergone the passing of someone they love.  I am writing this after the recent passing of a close friend a few days ago, so humor helps me in the moment.  That event also reminded me about the personal side of all of the business that happens around here. I am not sure if you looked around recently, but we are not just starting companies…we are really living! The people who are the heart and soul of the “Silicon Bayou” are having children, getting married, forming relationships, helping family members with personal issues, and planning for the future as we all build our community.  Those of us who have had some success and have accumulated wealth and are looking to invest to support the future generations of people who will carry the torch. The whole circle and experience is priceless and wonderful.

In my own life, I know that, in working non-stop and going for the glory of changing the world, disrupting the status quo and building a company or a brand, I tend to forget that I am mortal. It is even hard to write that, truthfully.  Entrepreneurs and angel investors are often driven to the point that they forget about what happens after they get the final curtain call on the stage of life, or if something tragic happens which fundamentally alters their life.

The world of angel investors and startups is consumed by amazing people who necessarily overachieve to exceed their goals. They accumulate stock, wealth and other assets that need to be carefully protected so that the people they love can enjoy the benefit of that hard work after they are gone. I know that in my case, I am flawed in that I often put those I love the most on hold when work calls. I know that it is important to provide for them and protect them. I know that it is important to me personally that my own businesses continue into the future and that it’s clear what happens with that business if something should happen to me.

That is why I am asking you to think about some things and consider planning for yourself, your loved ones, your business and your community, if you have not already:

  • What happens to the stock or equity in your company after you join the party in the sky? Does it go to your co-founders or workers? Does it pass to your loved ones, children or spouse? How do the parties determine what that equity is worth? Do your loved ones have the ability to support themselves if they depend on you financially? If you are an investor with a portfolio of companies, what happens to your stock after you pass? Can anyone retain their rights to the investment you worked so hard to make?
  • What happens if you become unable to work or incapable of handling your own affairs? Does a trusted partner or spouse have the legal authority from you to act on your behalf?  Who, if anyone, has the authority to make decisions about what type of treatment you are ok with if you cannot tell them? How do you and your business partners or co-founders think deal with these type of events?
  • Is your founder’s stock safe in your personal name if something life changing happens like a divorce or accident?
  • What do you want to preserve as your legacy when all is said and done?

I don’t mean to be a downer when the exit we really want to think about is the one with the multiples of earnings and plenty of cash, but I thought I would toss these questions out there and give you something to think about as you continue your journey in life.  In fact, I hope the message is upbeat. The intangible and tangible legacy that lives on after us is our greatest asset and achievement, and I hope that we can all remember that when we deal with each other and those around us.  Life is short and beautiful, and we need to make the most of it.  Thank you everyone for being part of my journey.