Strategies for a Strong Exit
Whether you’re planning to exit to exit your business in a few years or ten years, your business should always be ready to sell, because you never know when a great offer might come from out of the blue.
Choosing Your Exit Door
There are a number of ways for you to make your exit. Which one would be best for you depends on factors specific to your business—and your personal circumstances.
Here are some choices:
Mergers and Acquisitions
Selling your profitable business to a larger entity is a tidy way to realize your gains and walk away. You should expect a buyer to scrutinize every detail of your firm’s activities, so having your financials accurate and up to date is essential. Your buyer will also be on the lookout for hidden risks and liabilities. As you would spruce up a house for sale, you should examine every facet of your business from a buyer’s perspective and make sure it’s as attractive as possible.
Initial Public Offering (IPO)
Once your business has reached a point of maturity and is attracting notice, taking it public can be a natural next step. It is a big step, however, and the demands imposed on a publicly traded company may take you by surprise. Your firm will face new disclosure, reporting, and compliance requirements. And your accounting and record-keeping will need to be immaculate. You can prepare by partnering with an accounting team that specializes in exit strategies for businesses like yours.
Selling Your Stake
If you own part of a business, you may be able to sell your share to a partner or other stakeholder. Once the value of the business and individual shares is determined, the sale can be relatively straightforward—provided everyone acts in good faith and there are no personal issues complicating the transaction.
In locating a buyer for your business, you might want to consider your own management team. After all, who knows your business better than those involved in running it? If they’re ambitious and you’re ready to move on, they could be the ideal prospects for a sale.
In all scenarios, considerable planning and preparation will be required.
And whichever route you take, be ready for a long journey. It will take months, at least, to finalize a successful transfer of ownership. Since such transactions are unfamiliar to most business owners, it’s also important to get expert help.
What’s My Business Worth?
Whichever exit strategy you choose, it will rely first and foremost on arriving at a realistic valuation of your business. That’s the starting point for any sound strategy.
To reach an accurate valuation, you’ll need a thorough inventory of all your business assets, both physical and financial, as well as intangible assets such as goodwill. You’ll need an up-to-date balance sheet and profit and loss statements.
At this point, you’ll definitely need expert help—and your buyers will certainly require it. The professionals at CPA On Fire have the expertise to guide you through this process. But you can get a quick estimate using our Business Value Calculator below:
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