Probability of Successfully Exiting Your Business Quiz

Do I have a written plan to exit my business that aligns my business, personal, and financial objectives?

The majority of privately held business owners regret the sale of their business within one year according to the Exit Planning Institute.

The sale of your business is just one aspect of the exit process. A comprehensive exit strategy that integrates your personal, financial, and post-ownership objectives will ensure you won’t regret any of your decisions and that upon exit, you are able to go into the next chapter of your life financially secure and continuing to lead a fulfilling life.

Do I know which exit option will meet my business and financial objectives?

There are six primary exit strategies, however, the vast majority of business owners will exit via a third party sale – with a buyer or investor outside of your business. If a third-party sale, the deal structure could be a recapitalization with a financial buyer, which would allow you to continue working in the business with an equity position. Or, it could be an outright sale to a financial or strategic buyer. The exit strategy that is right for you will be highly dependent on your business and financial objectives.

Have I had a mergers and acquisitions business valuation completed so that I understand the market value of my company?

There is no magic formula for valuing a business. Valuing a company for a third party sale is complex and requires a quantitative and qualitative analysis performed by an M&A specialist and is necessary to make critical decisions regarding the sale of your business. The ultimate value of your company will always be driven by the quality of the team that drives the process, brings the buyers to the table, and the economic timing of your deal.

Has the value of my business been integrated into my personal financial planning?

According to the Exit Planning Institute, 80-90% of a privately held business owner’s wealth is tied up in their business.

Integrating the potential selling price of your business net of tax and liabilities into your personal financial planning will help you understand if your financial objectives can be met upon exit.

Is my business positioned to attract investors?

According to the Exit Planning Institute, 80% of privately held businesses that go to market do NOT sell.

Most privately held business owners tend to believe that value is solely driven by profit. While performance is vitally important, there are also eight primary qualitative characteristics that have a significant impact on value and the motivation of buyers to invest in your business.

Do I understand TIMING and its impact on the value of my business?

Timing is a critical component to successfully exiting your business and is dependent on the marketability of your business, industry conditions, and the economic environment. Buyers are attracted to a business with a future runway of growth potential that they can capitalize upon so timing considerations must include not only your current business performance but also the future growth potential. It is also imperative that you assess the economic conditions that fuel capital availability and buyer activity.

Have I de-risked my business to ensure it will continue to perform in the face of disruption?

Proper protection of all intellectual property and intangible assets drives value. In addition, a well-strategized contingency plan for unforeseen events ensures the business will be able to recover quickly. This reduces risk for the organization and increases the value and marketability of your company.

Do I understand the process required to successfully sell my business?

The professional mergers and acquisitions sales process includes multiple steps from assessing the marketability of your business, marketing to targeted buyers, negotiation, management meetings, due diligence, and closing. It is essential that you understand the intricacies of each step of the process so that you are not taken advantage of by a buyer or misguided by a well-meaning advisor.

Have I identified the team that can guide me through the exiting process?

You are the expert in your industry and most likely have limited, if any, experience as to how to go through the process of selling your business. Therefore, it is imperative that you have an unbiased exit-planning advisor who will oversee the team of experts that will execute your transaction. The optimal buyers are sophisticated and have more experience than a privately held business owner in mergers and acquisitions, which create an uneven playing field throughout the process that, can result in a less than optimal outcome for the seller.

Am I ready for the next chapter in my life post-ownership?

Without a post-ownership plan to guide your transition into the next phase of your life and protect the wealth extracted you may struggle emotionally and financially. It is vitally important that you prepare in advance for this next phase. You may have operated your business for years, maybe decades, so transitioning from your business must be strategized in advance to ensure your financial and personal goals are met. It may be that you would like to continue consulting for the new owner, negotiate a long-term employment contract, or you may be ready to ride off into the sunset. Whatever your desired intended future is it will require pre-planning to safeguard your wealth and ensure your continued personal fulfillment.