Is Exit Planning what I do just before I put my business up for sale?
No, Exit Planning is not a quick prep that is done just before a sales transaction but rather the process that a business owner goes through to evaluate their readiness for a potential transaction that includes both financial readiness as well as mental readiness. In his book, Exiting Your Business, Protecting Your Wealth, John Leonetti defines it as:
“The written goals for the succession of a business’s ownership and control, derived from a well-thought-out and properly timed plan that considers all factors, all interested parties, and the personal goals of the owners in a manner and a time period that accommodates the business, its shareholders, and potential successors and/or buyers.”
When do I need to start this “Exit Planning” process?
Though this will vary between business owners and their businesses, the safe answer is at least three years prior to a planned transition event. In our experience most business owners need to do a bit of work on their businesses in order to maximize their value before sale. This three year window allows the owners to identify what value drivers need their attention and then to make the required adjustments within their businesses. If there are multiple areas that need corrections than this window may need to be longer to allow adequate time to implement changes.
What are the steps in bringing my company to market?
- Develop an Exit Plan for an eventual transition.
- Build company value based upon the findings of your Exit Plan and make the necessary corrections to your business operations.
- Enter the market from a position of strength knowing that you have taken the steps necessary to maximize your value and have entered the market at the most advantageous time for both your industry as well as the economy as a whole.
Who do I need to have involved in this process?
The team needed to successfully create the plan, build company value and then bring to market will utilize your current advisors (CPA, attorney, Financial Planner, etc.) as well as outside advisors when needed.
Your Certified Business Exit Consultant (CBEC®) will lead the process and help each advisor understand your goals and their roles in the process. True collaboration amongst professional advisors is essential in achieving the owners’ goals in a time efficient manner while controlling mission drift.
What if my timeline for sale is years away, will going through this process be beneficial for me?
Yes, this process helps a business owner realize what drives business value and not just cash flow or gross sales. By incorporating the Exit Planning and value building process early in a business’ life the better and more efficient the business will operate. This is especially helpful in the event that your company is approached by a buyer, you will know what your “number” is and you will be comfortable in the knowledge that you will not be leaving money on the table due to lack of being prepared.