If you are thinking (or should be thinking) about exiting your business, now is the time to begin working on your exit strategy. Unfortunately, this is new territory for the vast majority of business owners. Many have concerns about the value of the business and very few know how to start the exit process. Finally, some fall into the trap of trying to go it alone and wind up with a weaker business and a not so happy ending to the long and difficult struggle they endured building their business.
What is an exit strategy?
In its most basic form an exit strategy is a comprehensive plan that involves taking a business owner from the present day, through the execution of the deal and well into the next phase of the owner’s life. It will address a myriad of issues, both personal and business related, has a defined timetable, and includes assigned tasks for people inside and primarily outside the business. Essentially, it is your road map for navigating from being successful business owner to being an exceedingly happy and content former business owner.
What are the key stages of an exit strategy?
I recently attended a presentation by Bo Burlingham who wrote “Finish Big: How Great Entrepreneurs Exit Their Companies on Top”. In his presentation Bo discussed the four stages of an exit strategy. Regardless of the exact wording, these stages are common to any exit strategy. First is the Exploratory Stage, followed by the Strategic Stage, then the Execution Stage and finally the Transition Phase.
What is the Exploratory Stage of the exit strategy all about?
In this stage a business owner is determining what a successful transition looks like and investigating all the options available. Hopefully, you’ll have an experienced B2B CFO® who can oversee the startup of the process allowing you to stay focused on your business. You’ll also be working with a wealth strategist who can help you address the many family issues and determine the resources necessary to accomplish your goals. Finally, if you have a business coach or, are part of a regular peer group, they can provide valuable guidance and act as another sounding board for you.
What can you expect in the Strategic Stage of the exit strategy?
This is the stage where you are preparing your company to be sold. You’ll be making the changes necessary to maximize the value, build in components that are important after the sale, and getting your company ready for your final customer. The most basic item is growing EBITDA but there are numerous other issues to be addressed during this phase. At the completion of this stage your company should be positioned to operate without needing you on-board.
What happens during the Execution Stage of the exit strategy?
This is the stage where you actually “do the deal”. You will typically deal with experts in the particular type of transaction you are planning. For a 3rd party sale it will be an M&A firm and deal attorney, with an ESOP you’ll be speaking to experts in that arena, etc. Unfortunately, this is where many business owners start and starting here will result in you leaving chips on the table and, perhaps, a mess in the Transition Stage.
What the heck is the Transition Stage?
This begins when the deal closes and ends when you’ve fully integrated and are content being a former owner. It really is what the exit strategy is all about!
How do I get started?
Give me a call! I’m experienced in this area and have books and software that will help you understand the process and proceed through all four stages while continuing to build your business. I’ll get you an initial value and start building your success team. Then we’ll begin working through all four stages.
Christopher Buls – Expert in Exit Strategy
Partner B2B CFO®
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