A successful and effective exit from a business usually takes more than a miracle. I do believe in miracles, however gaining the greatest value for your company doesn’t usually happen without a solid design and execution. As a business owner contemplating a future exit, you should be focused on a plan that includes the following 3 design tips:
Is the market right? Are other parties interested in acquiring your company? Do you have plans for after your exit? Do you have more passion or anxiety over the business?
Timing is everything if your objective is to maximize the value of your company. Don’t be a statistic, too many company owners run the company up the growth curve, and down the other side before relinquishing control and exiting the business. Companies frequently grow beyond the capabilities of the owner, so all these considerations will help you determine the right timing.
Have you completed a valuation on the company? Can the value of the company be improved? Will the exit event provide the revenue, cash and stability you desire and need?
Value is the number one driver for most executives contemplating an exit. However, value is nearly impossible to change if you have one foot out the door. Value creation is difficult but will yield the greatest financial reward for each dollar invested. Reducing costs, improving processes, increasing margins, managing debt, hiring the right resources and growing the top line are all important factors in gaining the greatest value for your business. A good business advisor can help you navigate through the projects that offer the highest return on value.
Do your leaders have the skills, interest and passion to carry on and improve the business? Do you financially need the business to perform after your exit?
Succession is not an issue if you are emotionally and financially detached from the exit event. In this scenario, succession is the problem for the acquirer and the seller can take the money and run. However many small business owners can’t afford to detach financially and therefore must be concerned about the quality of the successors (family members or employees). Complicated exit scenarios tend to create succession challenges and as a result will have a negative impact on the value.
Exiting a business is not an event, it is a process. Albeit an emotional process, it requires a proper design to get the most out of the final exit event. Exiting your business is much easier when you understand the 3 design tips and have a plan to answer the tough questions regarding. . . Timing, Value and Succession. Then you can ” Exit by Design”, and not exit by mistake or miracle.