Planning Your Exit is Part of Running a Successful Business

03/13/19

How and when you move on from your business may be the farthest thing from your mind right now … but it shouldn’t be. Having a well-planned exit strategy is crucial, and not having one could be downright tragic, according to the experts speaking at the Arizona Business Council’s Educational Conference “Business Owner Exit Strategies & Deal Considerations.”

Some can’t wait for the day they can sell the business and retire to Hawaii. Others can’t imagine not going to work every day and see a bleak road ahead. Most business owners are probably somewhere in the middle. But wherever you land on the spectrum, do yourself a favor and start planning well in advance so however and whenever you exit, it can be done your way.

How to Start

According to Richard Lieberman, Chair of Jennings Strouss & Salmon’s Corporate, Securities and Finance Department and the conference’s keynote speaker, there are a number of factors to consider as you plan your exit including:

• How will you get consensus from key players in your company?
• How will you incent staff to continue after you leave?
• How will you make yourself expendable so the company can continue to run after you leave?
• How will you solidify customer relationships as you work through the process?

Understanding Your Options

Another step in the process is determining what type of deal structure works best for you and your company. Some options include:

• Sale of assets or stocks
• Joint venture or merger
• Sale of minority interest

Picking Your Partner

Once you’ve decided the type of deal that works best for you, you’ll need to determine who you want to make that deal with. Lieberman outlines your options as:

• Strategic buyers – Those who know your industry and may want to integrate your services with those they already offer. This could include a competitor, supplier, family member, or even your employees. Strategic buyers will typically pay more for your business.
• Financial Buyers and Private Equity – Those looking to invest in successful companies.

Lieberman suggests working with a third party to source buyers for your company when the time is right.

Be Good to Yourself

According to a USB Investor Watch Report, most business owners don’t have a full understanding of what takes place in selling a business, and how long that can take.

So be good to yourself and your employees. Plan early with different exit strategies in mind. This will give you the flexibility you need to get the most out of your business, whether you sell it, pass it on to your family, or have someone else manage it for you.