THE IMPORTANCE OF CREATING AN EXIT STRATEGY
A well-written exit plan is a comprehensive roadmap that allows owners to successfully exit their business as it asks and answers all the aspects that entrepreneurs and their advisers must consider when it is time to sell a business. Regardless of your reasons, planning your exit to capitalise on your business’ value will probably be the most important decision made during your business’s lifespan. You will improve the success of your exit strategy if you seek professional advice throughout the life of the business, not just at the time you want to exit.
Creating an exit strategy simply means thinking in advance about how you would like to eventually leave the business. It can remove much of the uncertainty and leave you well prepared to deal with the transition. To maximise value as well as peace of mind, the time to plan starts many years before the potential sale.
Mitigate the risk of financial failure
All owners will exit from their business one day. Failing to create an exit plan leaves you at risk of financial loss should the company fail, or need to be sold quickly leaving you unable to maximise its sale value if you don’t have an exit strategy.
According to a 2016 survey by PNC Wealth Management and the Exit Planning Institute, 86 percent of all business owners have no knowledge or training related to transitioning their companies. The same study stated that 50 % of all business owner exits were not intended – they occurred because of death, disability, divorce, distress or disagreement. This leads to a tremendous loss of business value.
Seeking the help of an experienced M&A partner to put together a strategic exit plan can mean the difference between a tragic loss of company value, or a successful and smooth process, assisting you in growing your business and making it more valuable to potential buyers that ultimately yields a good return on your behalf.
Value is Paramount
Knowing the value of your business is absolutely crucial and you need to be able to know and take stock of where you are today and what the value of your business is before you can start your exit planning process. Valuations also change considerably with time, markets, and the economy and so, knowing the value of your business is critical to proper business planning and achieving personal goals. Professional exit planning will aid the valuation process and help answer the questions that will lead you to make an informed decision.
Consulting professional exit planners
Rather than waiting until the issue confronts you, meeting early with professional advisors will help you prepare for a sale. By exiting wisely, you can maximise return for shareholders and investors and leave your business in the right hands, giving you the financial means and the peace of mind to move onto the next phase of your life.
Venture Corporate Finance is a middle-market M&A advisory firm for clients planning to sell their businesses, raise capital, restructure, or grow with acquisitions. We provide independent advice and bespoke transaction solutions to meet their specific objectives.
For more information on corporate finance and M&A services, contact Venture Corporate Finance.