ISSUE 142
In This Issue:
Should I Sell My Business Now?
 
Reviewing Objective Conditions Important to Successful Business Sale 

Should I Sell My Business Now?

Reviewing Objective Conditions Important to Successful Business Sale

As we have been discussing in the past few Exit Planning Navigator® articles, the personal decision to sell your business is usually based upon some combination of the following:

  • A desire to "take the chips off the table." Your tolerance for risk just isn't what it used to be.
  • The joy of going to work each day is fading. Not only has the fire in your belly gone out, but it's been replaced by the desire to do "something else," known or unknown.
  • The "Successor Designate" can't or won't succeed. Neither child nor employee is able or willing to fill your shoes.
  • You realize that now is the time to sell because you can attain financial security.
  • There are a lot of activities other than running a company that you still want to experience.
Along with the personal motives listed above, there are objective conditions that must be present to maximize your chances for a successful business sale. These include:

  • The Merger and Acquisition Market should be vibrant and near the peak in deal activity and pricing.
  • Your company should be experiencing increasing cash flow.
  • Your company should be maximizing the "Value Drivers" discussed in many past issues of The Exit Planning Navigator®.

On a regular basis (no less than annually), you should discuss with your planning team current business value and how best to increase and protect it. If your business has reached a Value Threshold that permits a sale that allows you to realize your financial goals, you have reached a point where you may be able to sell. If this is the case for your business, then the next step is to call our offices to discuss the process for selling to an outside third party. With access to an experienced "deal team" (such as a Transaction Intermediary) who can estimate the marketability and pricing if you sold your business today, we can help guide you through the process of cashing out of your business and moving on to the next stage of your life.

Remember, it usually takes years to significantly and consistently increase cash flow and business value.
If your business is not ready to be sold, even though you are ready to sell it, you may need to focus on increasing cash flow. This is best achieved by focusing on the Value Drivers recognized by the Merger and Acquisition professionals. For example, having a motivated management team, quantified operating systems and diversified customer base are a few of the key Value Drivers that are important to selling your business. Again, meeting with your planning team is key to maintaining a focus on increasing business value and cash flow through Value Drivers. The planning team will help you make the decision to sell as early as practical - hopefully years before the actual sale - so that the business is ready when you are!
 
Remember, it usually takes years to significantly and consistently increase cash flow and business value. Once you've made the decision that you would like to someday sell your business, the time to begin planning and implementing begins immediately. If you are ready to exit, and your business is saleable given the current M&A marketplace, the decision is usually straightforward. It is when you are ready to sell, but your business isn't, that the chance for burnout increases. Minimize the chances of that happening by working with the experienced Exit Planning Professionals in our offices so that you exit on your terms and your own timeframe.
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Subsequent issues of Exit Planning Navigator® discuss all aspects of Exit Planning. If you have any questions regarding the Exit Planning process, please contact Kevin Short, Managing Director (kshort@claytoncapitalpartners.com).