Don’t wait on a major event to trigger exit planning
Thoughts of selling are all too often put off by business owners until a major event demands that it be given due consideration.
Death, divorce, illness or internal disagreements are just a few of the major personal and business events which can trigger the need to think about an exit strategy. Unfortunately, letting these issues become the determining factor of when exit strategy considerations begin can, in many instances, result in a rushed sale and – inevitably – reduced value for the business itself.
Naturally, these situations are completely unavoidable and, depending on which scenario is at play, the issue of business value can be the least of the owner’s priorities. Nevertheless, selling a business for less than it may be worth is a shame, given the time, effort and emotional investment that has gone into its development.
So, what is the best way to avoid this kind of situation determining a low business sale value?
We find a change of mindset on the part of business owners can often mitigate the negative impact of selling a business under difficult circumstances. Making the shift toward viewing the sale as a process rather than an event can help ensure the business is in a strong position to be sold when the situation necessitates it.
It is to be expected that the majority of owners will not embark on a business venture with its sale in mind; however, we would strongly argue that exit strategy planning should be a consideration from the outset. The sooner the discussion is opened, the sooner business owners can begin to shape and maintain a company that will attract a buyer – and a value – in line with their own future objectives.
Some owners may feel this simply doesn’t apply to them as their intentions are to pass on the reins to the next generation. However, consider the following: if the business is passed on to a son or daughter and you have planned your exit in advance, you can ensure they will be taking control of a business which is buyer-ready should they themselves have to exit. As such, you will be passing on a much more valuable asset.
Whatever the future holds for you and your business, we maintain the importance of taking time to consider your exit strategy before circumstances dictate that you must.