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 [...]

Read More

In Preparing to Sell, Increase Your Company’s Value

“Quit while you’re ahead,” is an ideal strategy for business owners wanting to exit their business. This is easier said than done for most of us. However, if you keep your end game in mind in your routine planning, you can boost your chances of maximizing your rewards at the closing table. The National Federation of Independent Businesses (NFIB) shares five tips on how to improve the value of your business before selling it. Some are obvious but we see a surprising number of clients who fail to incorporate them into their business planning. Each of these are key topics our valuation experts consider when determining your fair market value. Check them out: 1. Strive to increase profits and cash flow. Buyers will ultimately purchase your business because they see a potential for their investment to grow based on the money the business makes. A good return on capital can be measured by the profit the business makes. As for the need to increase cash flow, this is important particularly for buyers who have taken out a loan to purchase the business and will be making regular payments. 2. Grow sales. Period. A business is most attractive when its records show [...]

Read More

M&A’s Triumph Should Signal Exit Preparedness

A recent study gave business owners cause to hope by suggesting that overall transaction prices for businesses sold are on the rise. The most recent results available show the number of deals completed increased by 25% from, while the total value of deals went up by 33%. The higher increase rate in total value suggests that the larger segment of the market is growing at a rapid pace. A pepdigest.com article written by Scott Eisenberg and Don Luciano of Amherst Partners revealed that both the number of deals and the total financial value of deals have increased significantly. Some of the other findings in the study conducted on the past year’s M&A activity include the following: The transactions in excess of $50 million are growing in both number of deals and aggregate dollar amount in excess of 66%. The growth rate is even higher for transactions in excess of $500 million (the fastest growing sector of the market). The growth rate for transactions under $50 million is significantly lower than the rest of the market with the under $10 million segment of the market actually declining on a year over year basis. One obviously missing component of the report was the absence of [...]

Read More

Much Ado About the Donts of Selling Your Business – Part 3

eBusinessAppraisals.com presents the third and final installment of its tips on what not to do when selling your business. Part 3 of 3 | Part 1 | Part 2 7. Not allocating the maximum possible to goodwill [if it applies in some states, personal goodwill] – Goodwill is an intangible asset which is financially determined by the amount in excess of your company’s book value that a buyer would be willing to pay for to purchase it. For instance, the value of your assets might amount to $900,000 but the buyer pays you $1MM, the $100,00 would be the buyer’s recorded goodwill value. Goodwill can refer to various things that may not necessarily have an easily determined value, such as your brand, procedures unique to your business, a good location, and a customer list, but these add to the overall value of your business nonetheless. In short, goodwill contributes to the capacity of your business to generate your projected future earnings. 8. Allocating as much as possible to depreciation recapture and non-compete – Depreciation recapture is a tax law provision that maximizes tax revenue whereby the profit on the sale of a depreciating asset/s is reported as ordinary income instead of [...]

Read More

Much Ado About the Donts of Selling Your Business – Part 2

eBusinessAppraisals.com continues to give business owners tips on what NOT to DO when selling their business. Part 2 of 3 | Part 1 | 4. Not employing the services of an expert investment banker to negotiate the transaction and an expert M&A attorney to close it – Having experienced professionals advise you and negotiate on your behalf should give you a sense of confidence that you are not short-selling your company, nor are you being shortchanged by a buyer. A team of professionals can see to it that you have prepared all the necessary documents, and they can review beforehand all the legal paperwork that you will need to sign to ensure the terms and conditions are agreeable to you and in pursuit of your best interest. You can rest assure that they can answer your questions about the transaction, and clarify anything you might not understand. They are worth every bit of their cost, and then some. After all, how could they not look after what’s best for your business when, most of the time, what they’ll earn will be a percentage of your business’s purchase price? 5. Mentioning price – Before going to market, you should have a solid [...]

Read More
Close