When the time is right to exit, these are the top 10 tips that are crucial to achieving a successful exit:
- Planning for the sale of your company is a transition – not just a business transaction.
- Getting the owner ready is equally as important as getting the company ready.
- There are distinctly different approaches to exits for small companies (revenue under $5 million) than for medium-size companies (revenue over $10 million and EBITDA over $1 million). The time frame is longer to prepare for accessing the Private Capital Markets to create 7-8 figure liquidity events ($X,000,000 to $XX,000,000).
- It takes a multidisciplinary team of professionals to plan and execute a 7-8 figure exit.
- Most business owners are at an information disadvantage when it comes to selling to sophisticated buyers. (Taking the time to build a good exit team overcomes many of these disadvantages.)
- The key to determining a company’s valuation is being able to document and defend the company’s ability to generate future cash flows. (Avoid using simple industry rules-of-thumb to determine your valuation.)
- How a deal is structured matters as much as the purchase price paid for the company … and timing influences both.
- It is not how much the company sells for that counts – what really matters is how much you keep after taxes, the fees you pay, and the amount of funds-at-risk that are tied to payments in the future.
- Having well-defined personal and corporate goals is the foundation for planning successful exits.
- Envisioning and preparing for your next stage in life (post-exit) before initiating the business transaction is the key to putting yourself on the path towards fulfillment and closing the right transaction without seller remorse.