Dec 17, 2014
Exit planning is a process that, if well managed and executed, should give any seller an outcome that meets or exceeds goals, and maximizes financial return. When asked about future plans to exit, most business owners have no plan whatsoever, or may answer something like, “When the right buyer shows up on my doorstep,” or “When I am ready and they meet my price.” While 96% of business owners agree that it’s important to have an exit plan, only 18% of them actually have one in place.* Getting an excellent price when one feels ready to transfer ownership doesn’t just happen without proper planning and guidance. The knowledge and skills required to develop and run a business are vastly different than the skills required to sell or transfer a business for optimum value.
Because the skill set is different, it is in the seller’s best interest to work with a team of experienced advisors to navigate the time-consuming task of creating and executing an exit strategy. The value your advisors provide will:
A good exit plan should protect your business investment, build value, mitigate risk, generate contingency plans and develop alternatives to explore. Some of the steps of developing a sound exit strategy include:
Define what your exit means to you.
Establish your goals.
Put it on paper.
Your M&A advisor will work with you and a team of experts to create a written plan. This plan will include:
Close the gap.
Put very simply, this is an exercise in defining where you are currently, where you want to end up, and the gap between the two. As simple as that sounds, it’s actually a process of evaluating many combinations of exit strategies to see which situation provides the best possible outcome, in terms of wealth and lifestyle.
Planning and executing an exit strategy can be a complex process that calls on many areas of expertise. Your M&A team will help you identify and analyze all options and opportunities, understand the pros and cons of different scenarios, maneuver the mazes of taxation, financial planning and legal issues, and meet the goals you established. You and your advisors should revisit the plan annually, and make any necessary updates.
For help in any stage of your planning process, or for advice on how to get started, contact us at 913-648-0185.
*Source: NY Times