In my last post, we looked at how to get the best possible business exit for you personally.
Hopefully, you’ve spent some time thinking broadly about what you want to achieve with your exit, both financially and in terms of intangible factors: like what you want to do with your time and money after the sale – and what your partner, if you have one, wants! (If you haven’t, you may want to go back and review the post before you read on.)
With that thinking in place, it’s time to get into the nitty-gritty of what you need to do to achieve the best exit deal.
Is Selling a Business any Different to Doing Other Deals?
I can already hear you thinking that getting the best exit deal can’t be that difﬁcult. You’ve been in business a long time and done lots of deals. Surely selling your business can’t be that much harder.
Unfortunately, most business owners don’t get the best deal when they exit their business. Usually they don’t even get a good deal. Even if you’ve sold a business before, it’s still usually a difﬁcult, emotional and frustrating process.
There are, however, ways to get a much better deal and get through the sale process in a much less stressful way. My aim in this series of posts is to help you prepare for your business exit deal in a much more strategic way than most business owners.
The Four Pillars
Here are the four “pillars” I strongly recommend to get the best exit deal:
I’ll explain them briefly here, and then we’ll look at each one in more detail in future posts.
Pillar 1: Decide the Best Time to Sell
Most business owners have the opportunity to exit their business over quite a long period of time: choosing exactly the right time to actually exit is crucial. Timing is sometimes the only thing that differentiates a great outcome from a total disaster. If you don't choose the best time to harvest, all your blood, sweat and tears could go to waste.
Pillar 2: Put a Great Advisory Team in Place
If you’re like most business owners, you’re great at solving problems and getting things done – and you usually don’t like paying for external advisers unless they’re really necessary.
Well, a business exit is one of those situations where it really is worth getting specialist expertise and extra hands on board.
Pillar 3: Create a Competitive Sale Process
It’s a simple but fundamental commercial principle that buyer competition means a higher price – and that definitely applies to selling your business as well.
It’s critical to get a number of potential buyers competing for your business in order to get the best price. After all, you wouldn't hold an auction to sell your house with only one potential buyer.
Pillar 4: Get Good Deal Terms
Getting good deal terms is the fourth pillar.
This can be tricky as quite often you’ll be selling to a much larger business, with substantial resources and expertise and more experience buying and selling businesses than you. Pillar 4 – a great advisory team – is a key to making sure you get good deal terms.
Only by putting all four pillars in place can you ensure you get the best possible exit deal. In the next post, we’ll take a closer look at Pillar 1 and I’ll explain how to choose the best timing for your exit.
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