Exit Stategy

EXIT STATEGY



Planning the sale of your business should take place long before the time comes to actually sell the business. Ideally, even before you start or buy a business, you should have a goal and concept of what you will do when you want to move on. The goal should always be to maximize the value of the business. Many business owners only visualize that their children will someday take it over. Unfortunately, most children don't want the business and the failure rate for second generation business is almost as high as new businesses. So, even if it does take place, you should operate the business with the intention of selling it for the maximum value. I generally like to talk to business owners a year or two before they actually want to sell. It is important to have records in order and "honest" financial statements. The old saying, "you can pay me now or you can pay me later." applies to business sales. If you have been making income "off the books", that will not be considered by a buyer in determining value, because if it is being financed banks and other involved parties such as SBA or INS will not include it in their analysis. Several months before your sale, you should start disposing of clutter. Unnecessary files and inoperable equipment should be gone before any buyer crosses your doorway. You should also take a look at your personal situation and what your needs will be after the sale of your business. Chances are you can maximize the value of your business by offering financing, and with today's market it may be the only way you will sell at all. Generally, it is well worth talking to your accountant and a broker about these issues on a regular basis throughout the time you are operating your business.