exit strategy for your businessExit Strategies for Your Business

Whether you’re looking to retire, get out of an industry, split with partners or just want to spend more time at our lovely San Diego beaches, proper exit strategies are a must.

By finding the strategy to help you in this regard, you’ll create a clean transition that is beneficial for whatever your step is. Let’s take a look at a few strategies that’ll help you out.

1. Go Back in Time and Create a Partnership Agreement
Obviously, you can’t go back in time (yet), but partnership agreements are really that important and are an absolute must when running a business with multiple partners.

A partnership agreement dictates how a partnership operates and what happens if one of the partners wants to exit. If you have a partnership agreement already, make sure it covers the full extent of the obligations of each party in the event one wants to sell or buy out the other partners. It should cover how a price is determined, a timeline of the sale and the obligations of each party as well as how the price is paid.

If you don’t have a partnership agreement, you will likely need to find a business mediator to assist in ‘getting all parties to yes.’ They’ll work with you and the other parties in your business to be sure that you’re able to leave the company and dissolve your ownership in a way that works. This can include facilitating settlements, scheduling meetings, and conference calls, and helping to maintain privacy and cooperating during mergers and acquisitions.

2. Have Your Business Properly Valued
There are an exponential number of candidates out there looking to buy a business, but what makes them interested in YOUR business? The top two deal killers are 1) a poorly priced business and 2) inaccurate or incomplete financial information. A great first step in deciding if you are ready to sell your business is completing a business valuation.

Your business broker or valuation analyst will determine the market value of your business by analyzing your financials as well as other key factors in your business. A competent business broker should mention any major flaws that they see in the numbers or major obstacles that could hurt your chances of selling your business.
You’ll need to get a proper valuation as a first step towards this to know where your company stands and how you can ensure a positive return on your investment come selling time.

A preliminary analysis of your business could cost you between $3,000 and $10,000 in most cases. Subsequent comprehensive studies can cost you upwards of $35,000 depending on the size of your business and what type of player you intend to sell your business to (private equity or family office, for example).
Part of our commitment to our clients is that we never charge you for a valuation if you are exploring the sale of your business and aren’t sure if it’s the right time.
By starting with this type of professional analysis, you’ll learn how much your company is worth, what sort of sales price you can expect in today’s marketplace, what strengths and weaknesses your business currently has, and so much more.

3. Consider How You’re Going to Sell, Transfer, or Liquidate the Business and your Ownership Interest.
What’s the end result you would like to achieve?
When you can answer this, you can reverse engineer your plan and decide your best course of action to take today to start moving towards your goal.

Many people seek exit strategies not just to sell a business, but to start a new professional or evolve into a new lifestyle. It’s easier to get through to the other side when you are honest about what you want next. Some owners are moving into retirement and need the proceeds of the sale of their business to fund the next 20 years of their life. This type of exit strategy looks much different than an owner that runs 3 businesses and is spread too thin and is selling the business that they spend the least amount of time on.

4. Seek Strong Professional Advice
Develop a working relationship with a network of competent professional service providers that can facilitate your needs. A business broker can help you sell your business, a CPA can help minimize the taxes you pay and an attorney can minimize any ongoing liability when the business is sold. Ideally, this network works as a team to achieve your goal whether that is dissolving a partnership, an outright sale of your business or exiting a failing business quickly to minimize your losses.

Surround yourself with knowledgeable advisors to help navigate to your end goal. This way, you’re able to protect your business, maximize it’s value and can weigh difficult decisions with feedback from experienced advisors.

Consider These Exit Strategies
Having an exit plan in place is absolutely necessary when you’re running a business. Use these four tips and you’ll be taken care of.