HOW TO PREPARE BUSINESS EXIT STRATEGIES
Exiting your business is a highly emotive moment; you are ‘giving up’ your life’s work and entrusting it to someone else. Clients look to exit their business for a number of reasons, whatever the reason it is key to develop a business exit strategy.
There are three key questions to ask when planning an exit.
Firstly, why you are looking to exit?
– Are you looking to retire?
– Is it time to cash in?
– Do you want to create a legacy?
– Does the family want to sell the business?
– Have you simply had enough?
Your motivation behind exiting your company is critical; too many people sell their businesses on impulse at the wrong time and never realise the potential value.
Once we understand why you are looking to exit, we can begin to prepare an exit strategy. Exit plans typically take 18-36 months to implement before the company is in a good position to sell.
Secondly, what will you do after you exit the business?
Many business owners feel a sense of loss after selling their companies, life loses a certain purpose and it is a difficult and emotional time.
Too many business owners sell their companies without realising the personal impact it will have on them. This is true for even the most hard-nosed entrepreneurs.
Coaching through this process enables you to plan and ensure you are ready for the transition.
Thirdly you need to consider how you are going to sell your business
This is a key part of the process to ensure you select the best partner, different approaches yield different outcomes. Remember your motivations for selling because you will want to partner with a firm who shares your vision and values
– Are you selling to a unknown buyer?
– Are you moving the company onto a business partner?
– Are you looking to create a family exit strategy?
How to prepare a business exit strategy
Whatever the desired outcome the considerations are the same:
– Who do you sell to?
– When do we sell?
– How do we maximise value?
– Do we require funding to exit?
– Where does my life go next?
– What do I do with the money I have suddenly receive?
These questions and more are explored when creating an exit strategy, there is no template because every situation is different.
Maximising Sale Value in Another Way
Traditionally businesses put a focus on increasing profits to elevate their valuation; increase sales and reduce costs. This is a short-term strategy which does not promote growth or deliver the best return for you.
I focus on impacting the valuation multiple (value = profit x multiple), this effectively creates assets in your business that deliver growth and enhanced profitability. Therefore, potential acquirers value your business from a strategic perspective rather than as a simple financial transaction.