If you haven’t already, please check out our article on the importance of Business Exit Plans.
- Set your exit goals: What does your exit from the company look like? How much do you want for it? Determine what you want to achieve with your exit and set clear goals for the process.
- Value your company: Get a professional valuation to determine the worth of your business and identify opportunities for growth. If you can, do this a year or two in advance – so you have time to resolve whatever issues the valuation brings up.
- Assess your financial situation: Review your personal finances and determine the financial resources you need to support your lifestyle after the exit.
- Develop an exit strategy: Choose the most suitable exit strategy for your goals, such as selling to a third party, transferring to family members or employees, or going public.
- Plan your timeline: Decide on a realistic timeline for the exit process and set milestones to track progress.
- Identify potential buyers: Identify potential buyers for your business and research their acquisition strategies and preferences. Again, do this a year or two in advance of sale so you can align some elements of your business with their preferences and be as appealing a purchase as possible.
- Get your books in order: Prepare financial statements and records that reflect the true financial health of your business. A buyer will want to look through things carefully and ask questions – make sure you know the answers.
- Streamline your operation: Make necessary operational improvements to increase efficiency and reduce costs. This is likely to be something a buyer will do very quickly after a sale.
- Address legal issues: Review contracts, leases, and other legal documents to ensure that they are up to date and do not pose any legal issues for the exit process.
- Manage taxes: Work with a tax advisor to identify and mitigate any tax implications of the exit strategy. This is often a forgotten part of a business sale and will come up frequently during exit negotiations.
- Prepare your team: Prepare your employees, customers, and suppliers for the transition and communicate your plans transparently if you feel this is appropriate.
- Develop a transition plan: Develop a plan for the transition that outlines the roles and responsibilities of all parties involved. You may not have to do this as a buyer may prefer to do that, but if you develop a transition plan then it may make the sale simpler for a buyer – and thus more profitable.
- Protect your intellectual property: Protect your trademarks, patents, and other intellectual property assets before the exit process. These can add significant asset-value to the company.
- Address contingencies: Try to identify and address any potential risks or issues that may arise during the exit process, so you are not caught by surprise during the exit.
- Seek professional advice: Work with experienced advisors if you can, including lawyers, accountants, and possibly investment bankers, to guide you through the exit process. Beware of business brokers though as they often inflate the value of your company to win you as a client.
By following this checklist, business owners can ensure that they have a clear plan for their exit, mitigate risks, and maximize the value of their business.
As always, reach out to us if you have any questions that we can help you with.