Determining the right time for an exit is influenced by many factors. A case can be made that prudent companies should always be well prepared for an exit because business owners never know when an offer may come their way that could turn into an outstanding result. The discipline of being well prepared also helps to keep the company focusing on building value and executing solid business practices. Getting the company ready for an exit increases both the value of the company as well as the likelihood of completing a transaction on good terms.
The optimum time for an exit is influenced by several factors:
- company fundamentals;
- the lifecycle stage of the company;
- industry conditions;
- personal needs of the business owner;
- desires of co-owners and investors;
- the regulatory environment;
- public capital markets (Wall Street);
- private capital markets (Strategic and Financial Buyers);
- the broader domestic economy;
- the global economy.
It is critical for business owners to understand that when it comes to “timing” exits there are many influential forces outside the control of the entrepreneur, especially for transactions involving the Private Capital Markets. These forces can have a major impact on the value of the company and the environment for getting a deal done. When the time is right for an exit, several factors need to be in place to achieve a successful exit.