In 38 yrs helping business buyers and sellers, we have met with many owners who diligently run their business and don’t consider selling it until something crucial happens – It might be a divorce, a health issue, an accident… Something crucial acts like a wake-up call, and suddenly the business owner entertains the thought of exiting.
Honestly, the earlier you begin to plan your exit, the better. Industry experts suggest exit planning at least 2 years ahead of the date you want to exit. Even if you are years from actually moving on, you can take steps now that will make the transition more timely, improve the potential sale price, and ensure the business you have worked so hard to build has a solid foundation for future success.
The first step is to interview and choose an experienced business intermediary who can work with your accountant and your attorney. A business intermediary can strategize with you to prepare your business for sale while respecting the need for confidentiality. Together, you can discuss possible deal structures, financing options, tax and legal considerations, emotional aspects of exiting, and the transition timeline.
You may want to enhance the value of your business to achieve the highest return on your investment. This involves determining the current value of your most important investment and developing strategies to grow it over time. The process involves completing a strategic analysis, identifying key value drivers, and determining a plan to improve these key factors. Enhancing the skills of the staff that will continue with the business after the sale will also help to enhance the value of your business.
In addition to strategy and financial matters, a recent Harvard Business Review article identified relationships and emotional concern as important factors in affecting business transition success or failure. Many business owners have never given thought to what life might be like for them after the sale of their company. Emotional impact refers to this and, in part, to a sense of loss a seller can experience when he thinks about the welfare of his business and his employees in someone else’s hands. A seasoned business intermediary can help you prepare a well defined exit strategy that will hedge against the emotional aspects of the sale. The exit strategy can include a plan for the seller to stay on as an employee or consultant for a specified period of time to train the new owner and assist in relationship building between the new owner and the employees, customers and vendors.
When the day comes for you to consider exiting your business, contact us for a CONFIDENTIAL conversation with a professional business intermediary. We have the experience you need on your transition team!