Exit Strategy to Sell Your Business

Selling your business is a big decision. For most owners, once they are to the point of wanting to sell their business they are roughly 18-36 months away from putting it on the market. What the owner needs first is an Exit Strategy.

An exit strategy is often thought of as the end of the business. It can be. It’s really a plan that moves a business toward long-term goals and allows a smooth transition to a new phase. The new phase maybe putting your business on the open market or selling to a key individual in your organization.

A fully formed exit strategy takes in consideration stakeholders, finances, and operations into accounts.

Your initial step is finding out what your business is worth. Most business owners have what is called their “magic sales number”. It is the sales price that the owner would want to ask for the business. The difference between the “magic number” and your actual value is called the Value Gap.

Closing the Value Gap will include evaluating the company’s operating processes and policies as well as increasing profitability.

The next step to developing an exit strategy requires an in-depth analysis of finances. This gives a measurable value to inform the bestselling situation for your business. Areas of business to focus on include liquidity, profitability, sales, ability to borrow money and utilization of a company’s assets.

Ensure to use a third party business valuator to help you with the financial analysis and business valuation of your business. By utilizing an independent valuator, you are ensuring that there is no bias or conflicts of interest.

Now that you have prepared your finances and you know the true value of your business, it is time consider your options.

It’s time to assemble your professional advisory team to help you prepare your business for sale. Your team can include a business coach, an accountant, an attorney and a financial advisor.

A Business Coach will help you create value in your business.

An accountant will help you protect the value that is being built in your business from the effects of taxation. Plus the sale of your business will go smoother with a set of audited, good-quality financial statements.

An attorney who has background in business, contract law and buy/sell agreements will help distribute the value at the time of sale. Working with an attorney in advance of the sale will ensure that any relevant kinds of agreements are locked down tightly and make sure that any potential legal threats that could diminish the value of the business.

A financial advisor will place the proceeds of the sale in high quality investment vehicles and manage them. When a business is sold, there are good places that this equity can achieve excellent returns, so make sure the financial advisor knows what they are doing.

Start the process of knowing the value of your business today by contacting us at 281-724-1334.