Considering Your Business’ Exit Strategy
Over time you have nurtured your business like a parent nurtures a baby. It is your life’s work and may even be your identity. How do you sell it and get others to see its value?
This is a tough transition and sometimes a rude realization. Preparing to sell a business is a long term proposition. It can take up to three years. The wise will seek early guidance from experienced, outside, unbiased sources. This will help to map out your valuation strategy, make any changes in your tactics in running your business and generally clean up your business in preparation for selling. There is much to consider and could be a lengthy process.
The potential buyer does not see your business with the same emotional eyes as you. Their decision to buy is more often dictated by the return on their investments.
The financial history and trend of the business is a primary performance indicator. Questions that the buyer will ask include:
· How profitable is the business?
· How strong is the existing management staff?
· How involved is the owner in the business? The more ‘key’ the owner’s position in the day to day operations, the less attractive the business.
· How complex is the existing company structure, shareholders and their agreements?
· What are the outstanding debts, existing or potential liabilities, and any outstanding ‘legals’?
· What is the target market the business services and its future potential?
· What is the unique selling proposition that the business has (i.e. an edge over competition)?
· What are the untapped segments, new potential business, clients, and/or directions of the business?
· Are there any strategic synergies with the buyers needs or wants?
These are just a few wrinkles to iron out before you put your business up for sale.
ASE is regularly asked for input from clients as they venture through various stages of the retirement process and selling of their business. As retired business professionals having run our own businesses and successfully exited from them, we, as a group, have faced many of the issues arising in selling a business and are well acquainted with the options and obstacles with this stage.
Our vision at ASE is to volunteer our time and give back to the business community. We offer practical low cost advice to entrepreneurs. We act as a ‘sounding board’ and pass on our experience and wisdom to our clients that we have gained over many years in our businesses.
Shishir Lakhani ASE