Planning your exit strategy is about making a proactive series of decisions instead of merely reacting to unexpected events like a heart attack or an economic downturn. Depending on the size of your business, many business owners start the process of selling their business by calling an investment banker or business broker. The banker usually asks when did you make this decision and the seller will respond, “Yesterday. That’s why I’m calling you!” A business is no different than a house when selling. A buyer will be looking for “eyesores” and the business needs time to prepare for the sale. How is your business doing? Are you on the right sales trajectory? What do your business and personal tax returns look like for the last 2-3 years? It can take 1-3 years for a business to be ready for a sale to achieve its maximum value.
The idea is to put in writing when you see yourself leaving your business, how much income you need to walk away with and how you see yourself transitioning out. Do you envision yourself eventually downshifting to consultant? Growing the business to sell it? Grooming an heir to take your place?
A few things to consider when getting ready to sell your business:
- To whom does you business offer the most value?
- Are you better off taking on an investor and staying on?
- Is your profitability rising?
- Is your business scalable?
- How will the new buyer grow the business?
- How will your team handle a transition?
- How are your employees classified?
- Are you concerned with employee turnover after a sale?
- Are your personal and business financial records crystal clear for 2-3 years?
- Have you consulted with an accountant the specializes in tax law?
- Have you implemented any of the following:
- Phantom Stock Agreements
- Non-Compete Agreements
These are just a few questions that typically arise when discussing getting a business ready for sale. Strategy Sales Partners is adept at working with business owners to help them position their company for a maximum return on their liquidation event.