How Proper Exit Planning Benefits Both Seller and Buyer

Value For Sellers

Proper exit planning is critical for any business owner that intends to sell their company. When you are going to sell, you must know the amount of money that you will need to have on hand in order to make a comfortable exit, which involves assessing your cost of living. You may need to formulate a plan to decrease your annual cost of living, for example, by downsizing your living arrangements or selling unnecessary luxuries such as cars, boats, or vacation properties.

Selling a company is a complicated venture. There are complex considerations from financial, legal, tax, estate, operational, personal, family, and legacy perspectives. Having professional assistance from a reputable M&A advisor can help you navigate these matters and ensure that nothing is overlooked. They can also help to make the process less stressful and give you peace of mind that your exit plan is a sound one. They will also help you maximize the value of your business in a sale and prevent you from making costly mistakes.

 

 

Also, once you know your number, you can take steps to increase the profitability of the business and make it more attractive. The more marketable your company is, the more prospective buyers you will entice, and they will be higher quality buyers. Another reason that having a solid exit strategy in place will make your company more appealing to buyers is because it shows them that you are serious and have been smart about how you run your business.

There are several options for your exit strategy. You can sell to an outside buyer, sell to an inside buyer, do a partial sale, pass the company onto family, or liquidate the business altogether or over time. Astute exit planning can help you figure out which course of action is right for you.   

Value For Buyers

Exit planning simply primes a business for easier transfer in ownership. An acquirer wants to know what they are getting into regarding how the business will operate after the sale.

• How involved will they need to be?
• How much work will be required on their part to grow the business?
• Will existing customers and clients remain in the relationship?
• What is the state of the management team and will it remain in place?

A buyer is going to prefer to take on a business that will continue to run seamlessly through and after the transaction.

 

 

Smart for Everyone

When done properly, exit planning gives the seller a clear plan for their retirement and mitigates risk for the buyer so that both parties can feel good about closing a deal. The entire process is about setting concrete goals and following a timeline to keep your exit plan on track so that you can exit on your own terms. Failure to have this plan in place can result in disastrous circumstances, such as:

• Being forced to sell at an unfavorable time by unexpected events
• Having your business undervalued and leaving money on the table in a fire sale
• Wasting time and money on transactions that fail
• Failing to fulfill your retirement goals
• Burdening family with matters they are unprepared for and undercutting your legacy
• Paying more taxes than necessary

Is it Time to Plan Your Exit?

Even if you do not foresee retirement in the near future, it is never too soon to have a plan for the future. It is also extremely prudent and can protect you and your company from unforeseen circumstances. Take the time to do it right. Contact our experts at Benchmark International and begin the conversation about selling your company and your exit plan options. We will work at your pace to achieve your goals and lay out a blueprint for a future that you can feel wonderful about.