Common Sense Exit Planning
Exit planning or exit strategies almost always are concerned
with the sale of a business. It doesn’t matter whether it’s a
small company or a large one—good, clear and basic planning are
musts for an intelligent and well thought-out departure.
Selling your business, if that’s what you want to do is a
complicated matter. By the time owners are ready to sell,
they’ve been at it for dozens of years. There can be a great
deal of emotion, misgivings, uncertainties, confusion and an all-round sense of “is this something I really want to do?"
Here’s my sure-fire litmus test that you can use to decide if
you’re a solid candidate to begin the steps that it takes to
sell:
On a scale of 1-10, with 10 being the number that resonates
with you in terms of “Yes—I’m ready to leave. There is no doubt
in my mind whatsoever that I’ve had enough and I don’t want to
come to my office anymore.” Most likely you’re ready.
If on the other hand, you can’t get higher than say a 7 on
the scale, you’re not ready to leave. You must be at least
between an 8 and a 10. Otherwise you’re kidding yourself.
If you’re only a 1 or 2 on the scale, but decide that you’ll
test the market by setting a ridiculous price on your business,
thinking that if a buyer is dumb enough to pay you more than its
worth-- you’re wasting a lot of people’s time and energy. I have
found only one truly dumb buyer in my 35 years of working with
sellers of companies. If we ever speak I’ll share that story
with you. It’s hard to believe but it’s true.
Your exit plans should include the following topics:
- When should I sell?
- Where do I start?
- Who will help me?
- Is there any one in the company now that may be a buyer
candidate?
- How much is the business worth? Can my CPA set the
price?
- Do I take all cash at the closing or do I finance a part
of the sale?
- If I finance the sale how do I secure the loan I make to
my buyer? What happens if the buyer defaults on my loan to
him?
- What will I do with myself after I sell the company?
- How do I keep the sales process quiet from my employees,
salespeople, vendors and most importantly my
customers?
- Who are the buyers and how do we find them?
- Do I have to disclose all of the financial
information immediately?
- Can I sell myself or do I need a business broker?
These are just a few of the questions that owners need to
ask. There are many more that I can go through with you. The
important point is that you must carefully plan well in advance
so you can maximize your sales proceeds. Click here for my 2
page Guide to Common Sense Thinking in the Sale of a Business.
By the way, exit planning also includes succession planning.
There are a number of businesses that won’t be sold because
they’re family enterprises, or company management as already
designated the future leaders of the company. If you are faced
with how succession planning works in a family business, contact
me and I will forward the name and phone number of one of the
country’s foremost family consulting practices. Testimonials
|
Dear Gene,
Thank you very much for your
leadership role in our recent meetings with (seller) and
(attorney for seller). Gene, throughout the process you
have demonstrated a level of professionalism that is
refreshing. I spoke with our team afterwards and they
were all impressed with your style and your ability to
negotiate effectively on (seller's) behalf. I think the
the most poignant observation you made of our dealings
is that is in fact a one-time event for (seller) and a
recurring event for us (the buyer) You did a great job
of adopting (seller's) perspective and acting
accordingly on his behalf. You have my admiration for a
job well done.
Gene, as we move through the
remainder of the process it should be relatively
straight forward. That was the objective of the somewhat
challenging session that we spent together on Tuesday
night. From this point on, our team will be focusing our
efforts on developing a game plan that will make
(seller's) transition as smooth and enjoyable as
possible. I am sure that he's going to be a terrific
fit.
One of the best things about out
transaction together has been the opportunity to meet
and work with you. I hope this is not the last time.
Until the next time we meet, best
wishes.
Eric Bloom President
Note--Eric is the president of an
international billion dollar company. I represented the
seller in the sale of his company. I chose not to reveal
the seller's name nor the name of his attorney. GP |
|
I have to admit that I was stressed
out about keeping the sale of my company a secret. How
many times did I tell you that I was finished if my
employees or customers found out I was trying to sell
the company. You gave me excellent instructions every
step of the way and even though I resisted some of your
advice you were right. Nothing like experience and
honesty. You sure earned my trust. --Barry Rodgers |
|
