Beating the Odds for a Successful Exit
Businesses are investments. You must plan to create grow and ultimately capture the total value of this investment.
This requires a successful business exit, which must be prepared every day - from now.
The Financial and Mental Challenges to Exit
Over 75% of business owners regret the exit after one year, and only 5% are happy with the deal’s proceeds.
Getting your Business to sell one day is not the only challenge.
Financial and Mental Readiness to exit is just as critical.
Am I able and prepared to exit?
Do I want to leave the company behind, or do I prefer to remain involved in some capacity?
How will I fund the life I want after an exit?
How will the well-being of my employees, family, etc. be addressed in the exit?
Selling your Portfolio Versus Selling your Business
When diversifying your investment portfolio, it is primarily a financial decision. The decision on which percentage to hold as stocks or which specific equities to buy is based mainly on price and return on investment. Selling a block of securities will not take an emotional toll (unless, of course, it was a significant loss).
However, selling your business is much more complicated and personal. To sell without regrets, you must be both mentally and financially prepared for this major life change.
In fact, financial considerations are only one of four considerations you need to plan and address.
Business Structure and Preparedness
Financial Considerations
This can take years to prepare.
Is the company attractive to a potential buyer?
Where does it stand on the 8 drivers of Business Value?
Will you have the freedom to select amongst different options or face an imposed exit??
Can you afford to exit the business.
What kind of terms, if any, will you be able to select?
Will there be an extended “earnout” period?
Will you have to fund part of the exit yourself or take risks to make the deal happen?
When can I exit my Business and retire
At what price will I need to sell my Business to fund the remainder of my lifestyle
Professional Considerations
Personal Considerations
Most likely, you have an investment as well as a job in the company you own. Often the company is a significant part of your identity. .
What will you want to do after the exit? Full retirement or to still be involved in the Business as a passive investor or even an employee?
How long will you want to continue working?
Are you comfortable reporting to new owners after years of being your own boss?
What do you plan to do professionally in general after exit? Retirement, new Business, work elsewhere?
If you spent a significant part of your life creating and growing a business, you might suffer a deep sense of loss upon exit – almost as if you lost a child.
How will the exit affect you, your family and the employees left behind?
How will an exit affect your lifestyle? Will you have to find a new job or continue working?
Will you be able to retire and enjoy it?
How will you feel when the company is no longer part of my life or identity
Why are you selling? Are you being “forced” (burnt out, health, etc.) or “volunteering” (new opportunity, retirement, etc.)?
Being forced tends to lead to lower the selling price
In short, private business exits are difficult because they are so complicated and not just a matter of price and money, as many business owners erroneously believe.
They are intensely personal decisions
Are you ready?
