When you begin to consider exiting your business, you may find the process somewhat overwhelming. This is normal. You may also decide that the professionals you are used to consulting about matters relating to your business aren’t of as much help when it comes to transitioning it to a buyer. This is also normal. A business exit is a multifaceted process, and you must consider how it will affect you personally, financially, and professionally, as well as the effect it will have on your company. You can only exit this business once, so you need to do it right to get the results you need.
At Prometis Partners we recommend our clients follow a comprehensive exit planning process. The process will begin with determining what your goals are. You can’t benchmark the success of either the process or the outcome if you don’t establish your goals. You will need to consider how you want the exit to impact:
- Your family
- Your business
- Your employees
When you know what your goals are, then you can evaluate what your company’s transferable value is. This is the value of the business minus you, the owner. Once you have a good idea of what that value is, you can install value drivers, or actionable items that will move your company farther down the line towards exit readiness. You should also make a timeline of the progress you expect to make and set a tentative exit date. If you do not, you will only procrastinate in making the more difficult decisions before you. This will stall the whole process.
Each part of this process is vital for a good exit. You cannot skip any step in this process without it impacting the results. For most owners, the way they measure the outcome will be financial, but strengthening the business has its own value to the company, to its employees, to the greater community, and to your legacy as an owner.
Some steps will be harder than others and for reasons you may not expect. For example, you may want to transition your business to a family member or members. This sounds like a great idea for both your family and your legacy goals. However, if during the process of objectively determining how your company operates you discover that none of your family members has the leadership skills necessary to take it over…you’re going to have to make some decisions.
For one owner that might be choosing to sell it to an outside party instead of to family. Another owner might decide to work on building up leadership skills within the company or the family. There is no one right answer, but you cannot ignore the problem and expect to have a smooth sale process or have your financial goals met at the time of sale.
If you find any of this daunting as a project, that’s why there are exit advisors. We are here to help you determine value, set those goals, and install those value drivers. We can introduce you to experts who facilitate exit planning every day. We can make recommendations or introductions that will help you assemble a team of advisors who will guide you through the process, help you benchmark your progress, meet key deadlines, and transition your business to be ready for sale.
All of these steps take time, however, so if you think you will be exiting your business in the next decade, it’s important not to delay in consulting an exit advisor. If you would like to discuss your goals and the results that you would like to see, call us at Prometis Partners today. It’s our job to answer your questions and work with you to create the outcomes you need to facilitate the next phase of your life.