Prepare Early for Your Business Exit

Strategic Transition Partners consistently reminds business owners to prepare your exit from the business before unforeseen circumstances force the issue. Busy business owners may find exit prep abstract while dealing with day-to-day operational fires, so below we share these practical ways to get started.

In a recent article in the Huffington Post, freelance journalist Angela Haines wrote about business personalities who illustrated how strategic thinking and smart business relationships can be the start to your successful exit strategy.

Jim Estill, former CEO and current partner at Canrock Ventures, a technology investment fund, offered the following tips:

1. Put “exit” as part of your agenda as soon as you join a board, or start a company.

2. Start building relationships with potential buyers by connecting with them at trade shows, for instance, and then staying in touch.

3. Gather materials periodically to add to your “selling document portfolio,” such as financial statements, patent information, and legal documents, even including references on industry news or sales that can provide useful competitive data.

4. Assign an exit specialist from either the board or from company investors; or work with a third-party professional exit specialist, somebody who does not operate the company but would take the reins conducting due diligence, and setting up and leading exit meetings with prospective buyers or investors.

In some cases, the acquisition of the business could happen naturally as a business relationship with another develops over time. Big Tent, an online company founded in 2006 that connects women to communities they care about, links marketers to the million women members of the website. It was acquired last year by Federated Media, the next generation media and publishing company that Big Tent has been working with for over a year to connect web conversations with brand markets, having worked with the company for over a year before the offer for the acquisition came.

Around the same time, the founder of Big Tent, Laney Whitcanack, together with 11 members of her team, moved to Federated Media. She now works as Chief Community Officer working on strategies for more consumer interaction.

As these point out, companies and business owners must anticipate (or at least make strategic business alliances) that exit planning is an inevitable part of the business cycle. One way of looking at it is to operate your business through the critical eyes of a buyer who would gauge an acquisition based on the return of his investment, and the rate at which he can get them. This way, you can run, and make changes to the company relative to a potential buyer’s market. For this, a business valuation can give you a detailed account of what factors to consider.

A business valuation is an important component of the business process that determines the fair market value of the company. It assesses all the key value drivers and aspects of the business that negatively impact it, such as various expenses. It recommends cost-saving measures and takes into account intangible assets of the company to improve the economic value and make the business a more desirable acquisition in the process.

We provide professional, third-party business valuation services designed to maximize the value of businesses, and meet the exit strategy objectives of its owners. We have more than two decades of advising and deal-making experience in middle-market businesses.


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