"Your Perfect EXIT Strategy Begins on the First Day of Business” - Part II
Regardless of who you plan on selling to, one of the most important things to remember is that you will want to sell at the perfect time, and for the right reasons. There’s nothing worse than a rushed sale, and that’s why planning ahead is of paramount importance; having a plan in mind in case you become ill or need to retire early will help to avoid the pitfalls of selling your business in a rush, which can lead to getting a poor return or ending up unhappy with the way the business is run.
So, now you’ve thought about your ideal end goal, and who you will pass your company on to. At this point, it’s important to consider what things you should implement now in order to make your business as attractive as possible for later. The first important thing is that no matter who you plan to sell to, your business will need to be in the best condition possible if you want to get the best return on your investment.
There are many factors that you can work on improving in order to achieve the best results:
1. First, you should begin organizing your business records, systems, property and inventory so that you won’t have any difficulty passing a due diligence test in the future. Buyers want a clear idea of how financially successful your business is, so you’ll want to accommodate this.
2. How much you can sell your business for will also depend on your company’s assets, including trademarks, business contacts, , and the value of the physical assets. Preparing your exit strategy as early as possible will give you time to make sure that these assets are as high quality as possible, and you won’t be rushing to sort them out at the last minute. The higher the quality of your assets, the better chance you’ll have of retiring the way you always dreamed you would.
3. Consider resolving as much (or all) of your company’s debt, if possible, as well as settling any lawsuits and ensuring that all your taxes are paid.
4. Optimizing your profit margins, replacing office equipment, working on strengthening contracts, and updating your company’s branding will also help to boost buyers’ confidence in the success of the business and will lead to a more substantial financial return.
5. Lastly, and importantly, know what your company is worth. The higher your company’s valuation, the more money you can ask for during its sale and knowing the perfect price to list your company at in the first place will set you up for success. Getting a professional business valuation performed will give confidence to potential buyers, as well as set you up properly from a legal standpoint. Knowing your company’s valuation early on, or even on an annual basis, will keep you informed and help you to make the best decisions both now and as you go along to benefit you during your eventual transition.
Thinking about the end of your business or company can be difficult, and the transition itself is an emotionally-charged time in your life. However, preparing from the start and making use of professional services early on will help to make sure that you are as happy as possible with the final results.
Malahat Valuation Group is here to make this process easier for you during every step of the way. We help clients see the true value of their business and assets, and work with business owners to develop a roadmap that will help their business be as marketable as possible when the time comes. Contact us today with your questions and to get started on your perfect exit strategy.
Malahat Valuation Group