How To Successfully Plan an Exit from Your Business

Truly, exiting your business is a daunting task.  To many owners it can feel unapproachable and even treacherous to their founding values.  Therefore, it comes as no surprise when, as advisors, we discover that a business owner has done minimal or no planning for their momentous exit.  However, today’s savvy entrepreneurs should consider an exit plan as critical as their operating plan, as it will open the door wide to opportunity and choice.

Your First Steps for Exit Planning

There are steps that can be taken right now that get you started and will make the process much more tangible.

1. Determine your goals. They can be varied and multi-staged.  Are you aiming to reach a maximum level of enterprise value with your current capital?  Are you looking to begin a new venture but want to secure your long-built legacy?  Do you, your business partners, or family, have personal goals that ought to be considered?  This step is a critical first that, if started now, will result in greater possibility of outcomes to your liking.
2. Align your business’ current and future operations to these determined goals. Included in this step is understanding your company’s KVIs, organizing your financial reporting, and getting your overall business “house” in order.
3. Enhance your company’s market value. This final point can be accomplished once the first two steps have been completed.  You know the strengths and weaknesses of your company.  This is a great time to speak with your M&A advisor, especially in terms of market value. Syncing the two will allow for maximized enterprise value.

Your M&A Advisor can Handle Your Exit Strategy from Here

With in-depth market knowledge and fluency in the transactional language of strategic buyers and sources of capital, your M&A Advisor is equipped to achieve your goals. They understand the selling process and the common pitfalls, ensuring the value you’ve built isn’t compromised. Additionally, they are adept in exit strategies and can guide you if a market exit isn’t the best option. Your M&A Advisor should ask the following critical questions:

• What does your ideal future look like in 5 years? How about 2 years?
• What are 2 to 3 goals you can do now?
• What are 1 or 2 things needed to reach these goals that you don’t currently have or do?
• How will you activate this future now?
• What are the capital needs required?

These are important steps to preparing your business for an eventual exit.  It matters little if your exit is in 6 months or 10 years, as long as you don’t delay your planning process.  By preparing today, you will allow the optimal timely exit for success and premium value.