Exit Strategy
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He who prepares, wins.
What is an Exit Strategy?
- A contingency to exit your business upon short notice or a pre-determined time/event.
- This process can easily take six to twelve months or longer.
Why have an Exit Strategy?
- For most owners, their business is their largest and least liquid asset.
- Preparation can:
- Increase the amount of money in your pocket at the close.
- Decrease the amount of time it takes to sell.
- Improve the chances it will sell at all.
- An exit strategy is just good business practice.
What is the Best Exit Strategy?
- Preparing the business to sell in the open market.
- The open market will generate the best sales price. It’s also the most demanding strategy and covers the most bases.
- If down the road you change your mind and wish to transition the business to the management team, the employees or a member of the family, most of the work will already be in place.
Preparation
- Put a financial and estate plan in place.
- Have your business valued and your business plan updated every year.
- Understand intimately all of your company’s value drivers, risk factors, and potential synergies.
- Keep driving value growth.
- To be completely ready, you should put together a data room filled with all of the documentation required for due diligence.
Earmark your Transaction Team
- Business Sales Intermediary (Business Broker, M&A Advisor or Investment Banker).
- Financial & Estate Planner(s)
- Accountant and/or CFO that can keep your books in order in a format that shows earning unambiguously with a clear path to growth.
- Business Transaction Attorney
Execution
- If everything is in place, all you have to do is assemble your team and start implementing your exit plan.
