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THE IMPORTANCE OF AN EXIT STRATEGY
FOR A HEALTHY EVOLUTION OF THE
SPECIALTY SCHOOL
By Frank J. Menhams

[Frank Menhams, MA is an educational consultant with 15 years experience working in specialty schools and programs. He was former program director of the Cascade School. Frank also evaluates specialty programs and schools. He can be reached at 530-356-4747 or fmenhams@frontiernet.net.]

There are two major factors in the specialty school/ program industry which are shaping the future landscape of these businesses. One is the evolution of the cult-personality driven program, and the other is the lack of a viable exit strategy in the schools/ programs business plans. This first article looks at the latter factor, the lack of exit strategies in specialty schools and programs; I will address the cult-personality factor in a future article.

The landscape of the specialty school/ program is currently in the process of a major transition. Many of the original principals – that generation who started many of the successful schools and programs in operation today – are seeking successors to their hard-earned creations, someone to take-over, grab the wheel, take the helm, etc. This current state of affairs within the industry has exposed a very glaring mistake that most of the specialty schools and programs made at their very inception – the failure to have a realistic and tangible exit strategy as a critical component of their business plan (if they had a business plan at all). Without such an exit plan many programs seem to be opting-out at the first economically appealing offer that comes their way, and choosing to sell the program. While this may be an ideal situation for the business minded, the sale of one's program portends, in my opinion, the philosophical death of that program; maybe not this year or in four years, but the wholesale relinquishing of a program to a larger entity is almost a guarantee that the founder's original mission statement will not be in use within five to 10 years. This is by no means a “bad” thing; the question is, "Is this what the seller wants?" Do you want your mission statement to be a “mono-generational” phenomenon, or would you like to see your vision last further into the future? These are very real questions the principals must ask themselves.

To have a defined, realistic exit strategy one must have a clear intention. If you were in a race, wouldn’t you need to know where the finish line was? The development of an exit strategy enables one to make the best decisions for their business in the course of running the business. Being prepared for this inevitable event is crucial for your freedom to choose just what you want your program to become and how. Having an exit plan allows you to develop a strategy that fits your goals, i.e. do you want the program to live beyond your administration of it? Hopefully the importance of an exit strategy is becoming clearer to the reader.

Some forms of an exit might be;

1. Selling all or a portion of the business to another entity.
2. Passing on the business to family members (this happens more frequently than one might think).
3. Selling the business to an Employee Stock Option Plan (ESOP).
4. Taking the business public.
5. Or, one could liquidate the school/program, simply selling the physical plant and it’s contents (which yields the least return).

Now that you have figured out you need an exit strategy, where do you go from here? Assuming that you want to keep some sort of control of the future of your program not selling, you need the right personnel to fill the key positions that will vacate with your and your older staff’s retirement. Will those people come from inside your organization, or outside? How long do you think it will take to effectively train them to run the school in the context of your mission statement? Who will take the place of your successor when they leave their position for yours? How much time do you think you need to effectively transition out of the school and into your retirement, next venture, etc?

Realistically, you should allow yourself at least five years. If you think five years is a long time, consider the situation of a single entity program; limited human and financial resources, close knit employee environment, who is going to be “anointed” and who isn’t? When do you speak to the future successors about your intentions? What if they don’t want to take over the school? Larger business entities have the luxury of many more resources available at their disposal - a larger human resource pool from which to pull and cultivate future leaders and managers, far more financial latitude allowing a program to be re-configured while it has a very low census, and fewer concerns about employees as the “bottom line” tend to dictate how personnel decisions are made. There is nothing wrong or “bad” about a larger entity, in fact many, many exceptional programs that do incalculable good for children fall under this category. The question is, "Is this what you want to do with your program?"

Obviously I have only opened, and feebly at that, a critical topic that needs to be addressed right NOW by any independent specialty program or school. It seems a natural progression of NATSAP and its pooling of resources which include both very small and very large businesses, that these topics be fleshed out and brought to light, so that beyond our need to control the future of some program, we feel we have “created.” Only then can we surrender to the higher ideal of our service to the young and the troubled, that we might teach a better way to be in this world. After all, isn’t that what it's really all about?

Copyright © 2005, Woodbury Reports, Inc. All Rights Reserved.
(This article may not be reproduced without written approval of the publisher.)

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