At CMC Partners we are very lucky to work with talented owner managers who have grown their business, and 1 topic that comes up early on in the series of meetings is about how can they develop an exit strategy for the business or plan for a succession with getting the true value. They do not have to work 7 days a week until they die, and get some of the value they have built up in their business into their own bank account.
It is a fairly complex situation as every business and owner is unique in what it does and what the business owner personal objectives are. I have written about the different subjects including how to value your business to types of sales such as MBO, MBI, trade sale, etc. (read through the articles here).
The discussions with business owners fall into 7 key areas:
1.Increasing the Business Valuation
- How do I build value rather than simply grow the business?
- Methods of valuation and what are the myths – P/E ratios, multiples and book values alone mean less money for you
- What should be my exit strategy and how do I time it for the best returns?
- How do I present the financial data properly?
2. Packaging my Business – Getting it Ready for Sale
- Starting to see your business through the eyes of the buyer
- How can I best explain the company’s past; documenting its future potential
- How can I create documentation that show the best value
3. The Sale (and / or Merger) process
- What are the steps to take you from the start of the selling process to a successful close
- What are the common and costly pitfalls to avoid
4. Explaining the jargon in real terms
- There can be a lot of jargon involved and it is best to have this explained beforehand – CAPM, discount rate, EBITDA, and many more
5. Identifying and Approaching Buyer
- How to identify and approach the right buyer
- Which buyers to avoid and why
- Why big companies buy small companies
- How do I improve my odds when dealing with sophisticated buyers who purchase several businesses each year
- Why your most likely buyer may not be the best buyer
6. Negotiating and Structuring the Deal
- Negotiating mistakes to avoid
- How professionals may get the best price in the shortest time
- Managing multiple buyers to obtain the highest possible selling price
- Deal structures designed to give you more cash with less risk
7. Forms of Payment
- Making your business “pay you” even after you exit
- How to increase the total price by using royalties license fees, consulting fees etc
- Important legal and tax consideration
- Protecting your lifestyle and estate needs
Making the decisions required to plan for the sale or exit from your business is never a simple set of choices and you will need some guidance. If you are thinking about your exit strategy or if you would like to explore how we can support you through your business journey, call us on 01844 319286 or complete the form below.