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A Business Exit Plan: How Many People Are Involved?

A business exit plan isn’t something you develop overnight. Positioning your sale to make top dollar in the marketplace takes years of preparation before you ever sign on the dotted line in the actual transaction. You’ll want to employ a dedicated team that will take the time and effort to maximize your gains leading up to the sale.

You’ll want to strategically plan your exit.  Let me explain. Recently, while speaking with a prospective client, he told me of his intention to sell his business. He said, “I have an interested buyer, and I think I can negotiate this particular deal myself. It will net me more money than hiring a team to the do the negotiations.” So I began to go through all the scenarios he may encounter. I asked some very basic questions. As our conversation progressed, he quickly realized he was outgunned and didn’t know what he was talking about.

I wasn’t trying to discourage him from selling, nor was trying to throw him under the bus. I merely wanted him to realize how important the sale was. Getting a team together to make sure there were no mistakes was the best and most efficient way to guarantee he would end up with a desirable return on his investment. Here’s who I told him to employ.

Obviously, you start with the quarterback or the master planner. They act as a team leader. It could be anyone of the following: an attorney, a CPA (Certified Public Accountant), or a CFP (Certified Financial Planner). Whoever you choose to be at the helm will also carry  CEPA (Certified Exit Planning Advisor) designation. This commission means  The person holding it has done over a hundred hours’ worth of work. The education they must undergo is very similar to an MBA program. The Exit Planning Institute only issues the tittle. Their purpose is to help and show business owners how to maximize their business’s value, conduct personal financial planning and then develop a life after business. So, a CEPA would be an excellent person to place in the all important quarterbacking role.

Along with that, some of the other major players involved in the sale may or may not include any of the following:

  • A certified business valuation-This is where you place a value on your business.
  • Insurance agents-You may need a consultation with them if you sell a division of the company, buy another company, merge companies, or move things around.
  • Attorneys-Any time you transfer your business to someone else, there’s risk involved. That’s where an attorney comes in. They’ll assess the risk and help manage it. There may also be estate planning or, business planning lawyers and MNA (see below) attorneys.
  • Value enhancement experts-These guys are the ones that come into your business, utilize some really cool software to show how you can enhance the value or the multiple in your business to garner maximum profitability.
  • Certified Financial Planners™-However, you may want a CFP® who is used to working with businesses.
  • A Mergers and Acquisition Specialist or a MNA
  • ESOP services
  • Family services
  • Real estate agents
  • A Certified Public Accountant (CPA)-The sell may actually require two or three, depending on the type of business you own.

The list goes on. It’s not surprising even some of the smallest businesses
Being transferred to end up having 10, 15 and 20 different professionals involved when it comes to the planning and selling of that business.

So, an exit plan is so much more than, “Hey, I have a buyer” like my prospective client said. The better way to phrase it is, “ Hey, I think have a buyer, help me plan this for maximum benefit.”

At the point when you have a buyer and are ready to exit, then it’s too late to maximize profitability if you haven’t done the proper planning. Typically in that scenario, you just aren’t going to get the highest bid for your company. That is what this gentleman quickly found out. His business was not worth what he thought. An offer came in and it was depressing to this individual who thought he knew what he was doing when it came to exiting. So now, he will have to spend three to five years getting the business positioned to net the maximum value.

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