Chloe Quigley, CEPA, Business Exit Planning Advisor
What’s the most important thing when selling your business? Certified Exit Planning Advisors know that there are three equally important components of an exit plan:
- The strategy maximizes transferable business value.
- The business owner is confident that they are financially prepared.
- There is a clear plan for “What’s Next?” for the business owner.
We think of these as three equally important legs of a stool. Why are these important? Because a successful exit can only occur if all three are in place. For example, a business owner may have a very lucrative business. Their systems are documented. Their team is well trained and they have a great company culture. However, that business owner has no idea of what they’ll do next.
Do you think that this business owner is inclined to transition their business to someone else?
Why would they leave a good thing? Even if the current job isn’t ideal, studies show that uncertainty breeds discomfort and anxiety.
In other words, the long work hours and busy day to day of running of a business can be more attractive than the unknown of what’s next and the inconvenience of figuring out how exactly someone even sells a business.
Now, let’s go back to the other two legs.
Has the business owner worked with their team to maximize transferable business value?
The ability to do this requires time and expertise often outside the business owner’s wheelhouse. When done right, the effort pays dividends. Having a team in place that can help a business owner look through the lens of a buyer is a new world from running and growing a company. M&A professionals, valuation specialists, and other team members can help give business owners these insights.
Are the business owner and their loved ones confident that they can achieve their personal and financial goals entering this next stage?
Business owners and their families need to know that the sale will provide adequate funds and transfer the business in alignment with their goals. “Are we going to be OK? Is our family going to be OK? Is the business going to be OK?” Similarly, this requires the guidance of subject matter experts that can draw out a family’s goals, retirement expenses and projected after-tax income from the sale of their business.
Creating your business succession plan is complicated and for many business owners it is there one and only chance to sell. By focusing on these three legs and developing an experienced team, you can simplify, prioritize, and execute a successful exit roadmap.
Connect with our team today.