Exit Planning Services

Business Exit Strategy

Millions of baby boomers have spent the better part of their adult lives building their own small to mid-market businesses. Most of these people will retire within the next 10-15 years, but what will happen to their businesses?

Without a well-thought out plan, most of them will simply cease operations, leaving billions of dollars “on the table”.  Millions of jobs will also disappear if these companies shut down.

 

If you are nearing retirement age or want to get out of your business before you reach retirement age, you need to develop an exit plan. The best time to start is NOW.

Increase the Value of Your Business

Our main focus is helping clients increase the value of their business in preparation for the exit.

Here are some of the most common levers we use to drive company value:

  • Increase the ratio of recurring revenue to one-off revenue
  • Improve customer satisfaction
  • Reduce dependence on key personnel (internal)
  • Differentiate your business from the competition
  • Improve steadiness and predictability of cash flow
  • Reduce dependence on top customers (external)

We help business owners explore their options, select the best one, and then develop and execute a plan.

Step One: Assess

The first step is to conduct a careful assessment of your business, your personal financials, and your goals.  Most small business owners overestimate the value of their business, and underestimate what they will need after they leave the business.  An in-depth business assessment will identify business strengths, weaknesses, opportunities and threats. A review of your personal financials and goals will complete the picture and identify any gaps between what you want in the future and what you can reasonably expect based on your current position.

Step Two: Plan

Once the assessment is complete, the next step is planning. What are your options, and which one is right for you?

There are multiple options for exiting a business, but few of these options are available to any business at any particular time. For example,

  • An ESOP conversion is generally too expensive for businesses with revenue below $5 million.
  • Private equity groups are rarely interested in businesses with revenue below $5 million and EBITDA of at least $1 million.
  • A sale to an outside party can be very attractive when the economy is doing well, but prices can drop precipitously in economic downturns.
  • While a conversion to worker owned cooperative can be an extremely attractive option for a wide range of businesses, it is a complete mystery to most attorneys and consultants.

Step Three: Implement

Once Step Two is completed, the next step is to actually implement the plan. Depending on the condition and size of your company, this can take anywhere from one to three or four years. We can help also you during the implementation phase.  This hypothetical case study illustrates some of the common challenges encountered by business owners during the implementation phase.

Many business owners leave huge amounts of money on the table by skipping this whole process. They simply list their business with a business broker and sell to the first person who makes a decent offer. Sometimes this works, and sometimes it doesn’t. If you instead follow the above step-by-step process and prepare for an exit in advance, you can dramatically increaase the value of your business, and ultimately, your net worth.

Contact Us now to prepare your exit plan, increase the value of your business, and increase your net worth.