Business Development Solutions

The Merger & Acquisition Resource for Growing Companies

Exit Planning

At some point, every business owner leaves his or her business - voluntarily or otherwise. When you choose to sell helps determine the amount of money you will receive to accomplish personal, financial, and estate planning goals. Exit Planning is the process of setting goals and deciding how best to achieve them.

Reasons Why Business Owners Consider Selling Their Businesses

·         Health

·         Retirement

·         Burnout / Boredom

·         Family Issues

·        The Owner's family does not have financial security if the unexpected happens to the Business Owner - Estate planning needs to diversify their assets or just wants to pull some cash from the business.

·         Business is not successful

·         Other business interests

·         Business has become too Risky

·         Partnership Dispute

·         Lack of Capital

 

Alternatives to Selling your Business

For each of the above reasons, there are alternatives to selling the business that should be considered in exit planning.

·         Refinancing

·         Recapitalization

·         Handle Owner Burnout / Boredom

·         Management Buyout

·         Empower a strong management team

·         Hire Competent Management

·         Transfer Business to Younger Family Members

·         Increase the Value by increasing sales, reducing operating costs, and / or enhancing the intangible values of your business.

·         Liquidate

·         Strategic Alliance

·         Merger

·         Joint Venture

·         Create an advisory board to identify and manage problems

·         Buy out of an unproductive partnership

Understanding your needs and goals and helping you make the right decision at the right time is a key part of Exit Planning and selling your business.

 

Should You Sell Your Business Now or in a Few Years?

Is selling your business important to you and your goals in the next few years? Issues include:

·        Is the amount of money you will receive from a sale enough to accomplish personal, financial, and estate planning goals?

·         If you do not have the same focus, intensity, and passion for managing the day-to-day details of the business as you had when you were growing the business, will the business suffer and its value suffer?

·         Are you willing to continue with the intrinsic risks of business ownership that can reduce its value? (Risks include: economic slow down, key employees leaving, new competitors, declining health ...) Also, for the next one to three years, do you have the drive to manage the day-to-day details of the business to increase its profits and value?

·         Will growing the business for a few years before selling it really make you much more money than if you sell now?

These questions are almost misleadingly simple to ask, but to answer them requires thought and action on your part.

Do you find yourself thinking about getting out of your business? Are you wondering how to groom a successor? Is passing your company on to your children becoming increasingly unlikely? Are you getting tired of fighting the alligators and want a different challenge?

If you can answer yes to any of the above questions, it is time for you contact us. No pressure and no hard sell, just an opportunity to confidentially discuss if you should sell now or create an Exit Plan for you to sell later.

Many sellers wait until health or financial reasons force a sale. Selling when strong and prepared brings the highest value.

 

CREATE AN EXIT PLAN

If you don't know how to get started, you are not alone.  Few, if any, business owners know how to leave their business in style.

Leaving in style means leaving your business to the successor you choose, for the price you want, at a time you pick.  An Exit Plan makes all that possible. You may be thinking of selling to an insider, such as a key employee, co-owner, or younger family member. To get top dollar for a business, it should be sold to an outsider – who normally has more cash & the ability to pay more.

There are four ways to get top dollar for your business:

·         Determine the business value now. Will the sale of your business help you obtain financial security?

·         Choose when to sell.

·         Take action to increase the value of the business.

·         Use the proper sales process to sell your business.

If you are interested in selling your company, now or in the future, please call or e-mail us at your convenience to confidentially explore your options. We will provide information about the current status of the business sale marketplace, the process of selling a business, an approximate market value of your company, and techniques to save taxes on a business sale - all to help you arrive at a decision.

 

Your Actions Affect the Value of Your Business

The Value of a business is generally based on the most recent three years of financial results with the most recent year's performance being the most important. Therefore, if you have thought of slowing down, the time to do it is right after you sell the business. If you slow down before you sell, it may severely affect the value of your business.

If your decision is to sell your business later, we can assist you in grooming your business for sale - i.e. increasing the value of your business and increasing the attractiveness of your business from a potential buyer's perspective. See our "Just-in-Time" Chief Financial Officer Services to review how we can improve the performance of your business - and therefore its value.

 

Act Now to Create an Exit Plan

Most people work on things that are urgent. The key to success is to work on things that are important. If you work on things that are important and not urgent, you will be in a much better position when it becomes urgent.

Is selling your business in the next few years important to you? Without a Exit Plan, exiting / selling your business can appear overwhelming and, as a result, most business owners wait until it is too late to start the process*.   Also, even though it would be great to live forever in perfect health, you just don’t always know when or how you’ll leave, so it makes sense to run your business so it can be sold at any time.

A common mistake of many business owners is of being burnt-out and working in their businesses well past the point where they find it to be either fun or challenging; when they could make more money in new businesses, which are fulfilling or energizing,  which they acquire and manage after selling their current businesses.

 

* According to Business Broker industry data, only about 25% to 33% of all businesses listed by business brokers ever sell!

 

Exit Planning Steps

1.      Establish Owner Objectives – Do you know your specific cash requirements from your business sale to retire?

2.      Establish Business Value.

3.      Determine Value Enhancement Opportunities to increase the value of your business.

4.      Determine the sale structure to sell your business to a third party for top dollar after taxes.

5.      Determine how to transfer your business to family member, co-owners, or employees while paying the least possible taxes and receiving the greatest financial security.

6.      Develop a contingency plan for your business in case the unexpected happens to you.

These are the basic steps, for more detailed information please review the article on "Every Business Owner Needs an Exit Plan".

 

If you are interested in discussing your business objectives in confidence and without obligations, we welcome the chance to talk with you.

Business Development Solutions

Jay Whitney, President

770-410-7582

BDS@BizAcquisition.com