The copious amount of exit planning information available on the internet combined with the day-to-day stress of running a business causes many business owners to avoid exit planning altogether. However, without a plan, you will not be able to maximize the value of the business that you have worked so hard to build. The other reality is that one can spend one’s lifetime planning and never getting anything done.
With that said, there needs to be an even balance between “planning” and “acting” since we know that a plan without action is nothing but a dream. However, action without a plan can also be a nightmare. Generate a plan of action utilizing our latest seller resource, “A Simple Seven Step Exit Plan.”
Seven Simple Steps to Exit Your Business
Pacific M&A and Business Brokers Ltd. would like to share some simple and basic planning concepts that might be of interest to those that do not have the time, resources, or inclination to expend on planning for an exit from your business. Here are seven simple steps to exiting your business:
1. Talk to the Family
Consult with your family and loved ones to ensure all are in synch with your thought of exiting and that such is harmonious with the family unit.
2. Determine the Value
Start by identifying where you are at. Identify the Most Realistic and Probable Selling Price (MRPSP) of your business as it stands right now. Not a ballpark, not using a multiple, not a general valuation but the MRPSP that only a professional with a clear knowledge and understanding of the available buyer market for your business can provide.
3. Assess your Expectations
Assess your expectations against the MRPSP and determine if there is a gap. A professional business Broker can assist you with this. If the expectations are in line, then you go to the next step. If not, and there is a gap, then decide if it makes sense to do what it takes to close that gap or bite the bullet. There is no point going to market with an unrealistic price as you will only burn your possibilities, creditability and most importantly, your hope.
At this time, it is also important that you think about what you will do once you sell the business. Will you have enough money? What changes will you need to make to your lifestyle, if any? How will you invest the proceeds? Being clear about what you will do post-closing is absolutely critical to a successful close, or there is a good chance you may vacillate about your decision.
4. Determine the Timing
Identify your ideal timeline to exit. Be realistic here! Assess your forward room, as well as your abilities and forward risk. If your timeline is a year or more away, work hard at increasing your business value, by enhancing your value drivers and minimize your own personal value in the business as much as possible.
5. Prepare for Peak Value
If working with an exit or growth plan, work hard at it and stay focused. Your resilience has paid off till now, use it again. (I said resilience, not stubbornness – there is a difference!) If your timeline is shorter, clean up your business. Clean up your books, get organized, spruce up the facility, implement systems and processes, create operations manuals, empower creativity and performance in people and generally enhance the value drivers as much as possible.
6. Get With the Right Team and Go to Market
Find the most professional and results oriented Business Broker to help you with the sale. The ideal broker will likely be the one that provided you a professional MRMPSP since he or she will already be fairly familiar and intimate with your business and its value drivers. The Brokers’ assistance should include helping you prepare the business for sale, update the assessment of MRMPSP, create the marketing materials, perform his or her own due diligence on the business, go to market, manage and qualify potential buyers, negotiate the best possible price and terms, manage the buyer due diligence, manage the lawyers and accountants and successfully take it across the finish line with minimal to no post-closing risks for you.
With the assistance of your professional broker, find a professional and solution-oriented lawyer and accountant to assist in the closing.
7. Stay Focused and Be Patient
Stay focused on running your business efficiently and profitably while you are on the market. Don’t take your foot off the pedal. Don’t plan for vacations without first consulting with the Broker as that could impede a potential sale. Continue to run your business as if it were not for sale. Don’t let anyone know that it is for sale, and ensure your family members keep it confidential as well.
Finding the right buyer may take a little time. So be patient and stay focused on your businesses’ performance. Let the professionals do the rest.
For a confidential, no-obligation consultation with one of our professional Certified Business Intermediaries, contact Pacific M&A and Business Brokers Ltd. today!