So you’re finally planning to exit your business. Naturally, you want the best possible exit.
But what exactly is the “best” exit? Is it just a great sale price?
Sure, at one level it’s about your exit deal, particularly the sale price and the risks and obligations you will take on when you sell your business.
However, a truly successful business exit involves so much more.
Money can’t buy me…
Imagine you’ve worked your whole life in your business, given it everything and made a lot of sacriﬁces to make it successful.
You’re in reasonable health; your partner, however, has a serious health issue that over the next ﬁve years will start to signiﬁcantly affect their ability to travel and do anything physical. You both want to fulfill a lifetime dream of starting a boutique winery on your property down on the coast as well as spend more time with your three young grandchildren.
Two potential buyers have offered good prices for your business, each of which would fund a very comfortable retirement. The significantly higher offer requires you to work full time in the business for another four years. Under the other offer, you can leave the business after a short handover period.
Clearly, your personal circumstances and post business exit goals will have a big influence on which offer constitutes the best exit for you.
Your business exit is personal
Think about it now: what would your “best” business exit look like?
Everyone’s different, so you need to identify all of the factors that are important to you.
Here are some questions to ask yourself:
- How much do I ideally want for my business?
- What will the sale proceeds be used for: retirement, paying off debt, helping my kids, investing, travel?
- Am I prepared to keep working in the business after settlement? If so, for how long?
- What do I want to do after I exit my business: spend time with my family, travel, get involved in a community group, start a new business?
- If I use the sale proceeds mostly for retirement, how will I invest them and what return do I need to get? Do I have a ﬁnancial adviser to assist me?
- What does my partner want to do after the business is sold? Spend more time together, travel, buy a few luxuries, take the opportunity to do their “own thing”?
What about your business partner/s?
If you have business partners, then it’s crucial they also do the above exercise so all of your interests are taken into account and you reach a common view on important issues. The last thing you want is to have any disunity while dealing with a potential buyer and their advisers.
What you want changes
One of the key things I recommend you do is prepare an exit plan that covers all your key thinking and decisions on your business exit.
As you move towards your exit, make sure you reconsider the above questions and revisit your exit plan on a regular basis. You’ll ﬁnd that issues you hadn’t considered before will emerge, and your views on some issues may shift as you get closer to actually exiting your business.
You only exit once
I can’t emphasize enough how important it is to think broadly about what you want to achieve with your business exit. All too often I’ve seen owners sell their business for a good price but be left feeling hollow because they didn’t achieve other personal outcomes important to them.
Once you know what you want to achieve, you can start thinking about how best to approach your business exit. In my next few posts, I’ll look at the four “pillars” for getting the best exit deal.