Pop Quiz: Transition Planning

Thursday, May 10, 2012

1. My exit plan for my business is to _____ .

a)     Sell It
b)     Pass it down to the next generation
c)     Transfer ownership to key employees (ESOP)
d)     Die at my desk
e)     …wait, plan what?

2. If I want to retire at a certain age, I should have a plan in place about:

a)     6 months before
b)     18 months before
c)     5 years before
d)     3-5 years before
e)     …wait, plan what?

3. Most businesses are never sold:

a)     True
b)     False

Correct Answers:

#1 – Anything but E.
#2 – D is ideal, but it is never too late to start.
#3 – TRUE!

 Who Cares? You do.

You understand your industry, you have seen what works and what doesn’t. Same goes for us. After more than 25 years in the Mergers & Acquisitions business, we know most business owners are not successful in selling their business. Unfortunately, those who are rarely get their desired asking price.

There, we’ve said it. It is that dirty little secret no industry hawk wants to acknowledge, but it must be confronted by business owners and here is why…

Business owners who correctly implement professional, exit planning techniques – both the Do It Yourself types and those who hire a Certified Exit Planner – sell their businesses for higher values and more often than those who wing it.

Sure preparation leads to a better outcome. That’s obvious. Yet, time and again we find ourselves at the closing table with business owners lacking a game plan.

That is why most M&A companies, banks, insurance companies and business brokers are beginning to work with business owners earlier in the life cycle of a business. Exit planning has always been something everyone needs to get around to, right? Like eating right, exercise and getting to bed earlier.

So, you didn’t get to it yet? How do you get started?

1. Begin with value – get a professional valuation
2. Decide if you want professional help or to take a Do-It-Yourself approach
3. If you chose professional help, contact a company with a certified exit planner on their team (Item #3 doubles as good advice and a shameless plug for eBusinessAppraisals, which has certified exit planners on staff)
4. Don’t Fear the Reaper! Regardless of the outcome you have in mind for transitioning out of your business, proper exit planning will prepare you and your family for the day you hand over the keys or even head out the office door feet first

Proper transition planning does not box you into one particular plan. A solid transition plan gives you the flexibility to assess your options, change your mind and prepare for the best and worst case scenarios.

So get started today regardless of your time frame. If you still own your business, it is not too late.

Blog, Business Valuation, Exit Planning, Selling a Business business valuation, business-value, exit-planning, selling a business