THE EXIT PHASE

It’s important to understand your financials and what your business is worth.

As a private business owner, you know that every major decision required careful thought and preparation; and what bigger decision is there than deciding to sell your business? To sell your business is not as simple as putting up a for-sale sign. There are lots of things you need to take into consideration, and many steps to prepare. Making these strategic decisions will help you achieve the highest possible valuation of your company.

Here are some points to consider when planning the sale of your business:

You are selling your business, not yourself. Buyers will want to see a strong supporting management team. This indicates that the business will continue to be a successful long after you are out of the picture.

You need to start thinking about ways to maximize profitability before deciding to sell your business. Ideally you want to have demonstrable and higher earnings when it’s time to sell. Focus on achieving those operational efficiencies, cost reductions and other vale enhancers in advance.

Having a good CFO of finance in place is a good start to implementing strong financial controls. Take time to really understand your business operations and look at profitability from an objective standpoint.

To most buyers, you are selling the future and future cash flows. Have a realistic and supportable forecast. This points to the credibility of management and the quality of the business. Providing potential buyers with forecasts that are reasonable, believable and achievable can further demonstrate the underlying value of your business.

Working capital is often an overlooked source of value, but it can be difficult for an owner to firmly grasp. Working capital is the lifeblood of a business, and buyers expect to receive a normal level. Managing working capital requires both effort and time, but it can free up trapped cash and can lower the total level of working capital buyers expect to be delivered.

Ensure that you have the right team of professionals helping you with accounting, tax, and legal. Each will have their role in the sales process and can provide you with different perspectives and expertise in their respective areas.

Here are some ways business owners exit their business:

  • Private Sale
  • Management Buyout
  • Co-Owner Buyout
  • Employee Ownership
  • Family Ownership

Phase 1: Startup

Make the right legal structure decisions in the earliest days of your company

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Phase 2: Growth

Raise money from potential investors without exposing your business to liability

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Phase 3: Establishment

Protect your assets by licensing the rights to your brand and intellectual property

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