You’re thinking about selling your business. World travels and the grandkids are calling. But where to start the transition out? The process is much more difficult than it sounds, especially if you are looking to retire on the money from the sell the business. Doesn’t it make sense to bring in a dedicated team to strategically plan out your exit? We will be discussing some of the team players that are typically involved in building a business owner’s exit strategy.
Recently, while speaking with a prospective client, he told me of his intention to sell his business. “I have an interested buyer, and I think I can negotiate this particular deal myself. It will net me more money spending the money on a team to the do the negotiations.” So I began to explain to him all the possible scenarios he might encounter. As our conversation progressed, he quickly realized his ignorance could really cost him.
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 details of the sale would be. Getting an advisory team together to make sure there were no mistakes was the best and most efficient way to guarantee his transition out would as smooth as possible and that he would end up with a desirable return on his investment. Here are the professionals I told him he needed to employ during planning his exit.
Obviously, you start with the quarterback or the master planner. They act as a team leader. It could be any one of the following: an attorney, a CPA (Certified Public Accountant), or a CFP (Certified Financial Planner). Whoever you choose to be at the helm needs to also carry CEPA (Certified Exit Planning Advisor) designation. This commission means the person holding it has had over one hundred hours worth of work. The education they must undergo is very similar to an MBA program with certification by being trained by the Exit Planning Institute, whose 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.
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 the business.
So, an exit strategy is so much more than, “hey, I have a buyer” like my prospective client said. A better way to phrase it is, “hey, I think I have a buyer. I need help planning for maximum benefit.”
At the time when you have a buyer and are ready to exit, then it’s too late to maximize your business’ profitability and value. Typically in that scenario, you just aren’t going to get the highest possible 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 him, especially when he thought he knew what he was doing when it came to exiting. So now, we will plan to spend three to five years getting the business positioned to net the maximum value.
How? Learn more in our Building a Sellable Business blog/podcast series.