Making
Your Exit: How to get out without leaving money
on the table
- By Phil Zeni
Like a good real estate deal, you need to get
it right on the front-end to have the best exit.
Many entrepreneurs wait until it’s too late
to change years of operating patterns and financial
performance.
There are only three ways to exit: close it, give
it away or sell it. If you intend to simply shut
down, you don’t need to worry about great
bottom-line performance or growing to the next
level. The second option of giving it away can
be a little trickier unless you can find a 501(c)(3)
nonprofit willing to take it over. The other more
common and difficult give-away solution involves
family members, where taxes, familial expectations
and the market may all place continuing burdens
on you. Different from the model of simply shutting
the doors, bottom-line performance may be a bit
more critical in this instance. The best advice
for this option should come from your attorney
and CPA.
The third option, selling the business, presents
a totally different set of assumptions and operating
styles. Buyers reward sellers who have grown and
made a profit. Frequently, buyers seek funding
from lenders who are unfamiliar with the business.
Your passion that built the business and personal
salesmanship that worked on prospective buyers
will not translate to these lenders who are only
seeking hard facts.
If you want the best payback, begin early and
keep good records beyond the obvious financial
data and tax filings. Records such as personnel
files, performance measurement reports, studies,
competitive information, trend analysis, new product
or service launches and failures, even old advertising
material, etc., will place you in a better negotiating
position. If you won’t do it, recruit your
spouse, partner or bookkeeper to methodically
keep files and review them regularly for completeness.
It will pay dividends in the future—fact-based
candor and transparency are powerful negotiating
tools.
Your ability to answer the questions: Where is
this business today and how did you get it here
means you have the necessary ante to play the
game at the MandA card table.
Finding a Buyer
The next step is determining what type of buyer
will reward you most generously and knowing where
to find them. This is where professional advice
should come in. MandA specialists, business
brokers, investment bankers, even commercial realtors
make a living doing this type of work. In all
likelihood they will be more objective and resourceful
than you in getting your business sold. Make sure
to interview several.
As a caution, sell your business to family and
friends only if you are willing to be blamed for
all post-sale problems. However, it may be worth
it if the payout allows you to enjoy it from your
villa in Italy.
Phil Zeni (
phil@nextlevel4u.net)
is CEO of The NEXT LEVEL, a management consulting
firm furnishing marketing and sales programs,
start-up assistance, international business development
and merger and acquisition services.
Business & Management