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  • #1000301
    nathalie1
    Member
    • Total posts: 3

    Hi everyone, I am kind of new to this forum but I was wondering if anyone ever thinks of planning for an exit strategy?
    For example if you ever want to sell your business or plan to in a year or so, do you maintain a structured/consolidated information of all your business (financials/valuations etc.) for when you plan on selling?
    Is there a best practice out there or software that would allow you to do so and if not, would you rather have one if there was one out there?

    For those that have sold their business before, would you have preferred getting professional business advisory on some parts in hindsight?

    Thank you!

    Nathalie

    #1223777
    bb1
    Participant
    • Total posts: 4,472
    nathalie1, post: 270491, member: 118440 wrote:
    For example if you ever want to sell your business or plan to in a year or so, do you maintain a structured/consolidated information of all your business (financials/valuations etc.) for when you plan on selling?

    A well run business would have this information available, even if they don’t plan on selling. It is critical that all business’s have a structured/consolidated view of their financials, etc from day 1 to day xxxxxxx

    #1223778
    nathalie1
    Member
    • Total posts: 3

    Bert, but what about the remaining aspects of selling a business or planning for an exit strategy?

    We often talk about starting and growing business but it seems as if the exit planning strategy is never provided for founders looking at exiting or selling their companies within X years.

    Do you have any insight on how to effectively plan for an exit and avoid the stress that comes with rushed sales and disappointing valuations?

    #1223779
    cameronryan
    Member
    • Total posts: 6

    Hi Nathalie, planning properly for an exit/ sale is so important if you are wanting to maximise value and complete the sale in a timely manner. As a business broker, I see dozens of businesses every year that are considering selling but very few that are properly prepared.

    I agree with Bert that a well run business should produce consolidated financial info daily/ weekly in normal circumstances, not just when selling. But there is a lot of other information (financial and non-financial) that is also very important to have available should a business be placed on the market for sale.

    The two biggest sales I’ve facilitated were the easiest two sales I have facilitated. This was mainly due to thorough and well executed planning prior to sale. Would be happy to discuss with you further if you wish.

    #1223780
    Mel S
    Member
    • Total posts: 9

    Hi Nathalie,

    Yes, it is beneficial to have a plan in place if you’re planning to sell your business. Refer to the link below for more info re: pitfalls you can avoid by having an exit plan.

    Ideally, it is recommended that you put a plan in place 12-36 months prior to when you want to sell the business. At a minimum, you should put a plan in place at least 6 months prior to selling the business if you can’t do it sooner.

    Yes, there is a best practice methodology and software that will allow you to do exit planning. The MAUS methodology has been recommended by the Exit Planning Institute in the USA and the Institute of Exit Advisors in Australia. MAUS is the leader of exit planning solutions in Australia and the US.

    I’m a MAUS certified advisor and network partner. We have some questionnaires which you can do to assess the financial health of your business and to determine the state of your readiness to sell the business (see link below re: questionnaires).

    The link below also provides more info about our exit planning process including some statistics from Exit Planning Institute that might help you decide if you want to use a business advisory service or not. However, it is recommended that you seek relevant professional advice appropriate for your personal circumstances.

    You will receive complimentary free reports and some of the questionnaires only take 7 minutes to complete. Here’s the link to help you get started with your exit planning for free:

    https://bit.ly/3lyAEHU

    If you want more information, please do not hesitate to reach out. I’d love to help.

    #1223781
    businesstrade
    Participant
    • Total posts: 210
    cameronryan, post: 270682, member: 86268 wrote:
    As a business broker, I see dozens of businesses every year that are considering selling but very few that are properly prepared.

    I imagine those businesses that you are speaking of were most likely thinking of selling due to necessity rather than exercising a well planned exit strategy.

    Felix

    #1223782
    Paul – FS Concierge
    Moderator
    • Total posts: 3,120
    BusinessTrade, post: 271107, member: 113709 wrote:
    I imagine those businesses that you are speaking of were most likely thinking of selling due to necessity rather than exercising a well planned exit strategy.

    Felix
    Just a guess.

    Most people understand and execute on the complexity of their own business. They often take years to develop their expertise.

    That expertise doesn’t often translate to the expertise needed to properly prepare a business for sale.

    My own observation is also that a lot of people want to cheap out when it comes time to sell.

    And another group way overestimate the value of their business.

    #1223783
    cameronryan
    Member
    • Total posts: 6
    BusinessTrade, post: 271107, member: 113709 wrote:
    I imagine those businesses that you are speaking of were most likely thinking of selling due to necessity rather than exercising a well planned exit strategy.

    Felix
    Hi Felix,

    Yes, unfortunately most businesses do end up selling due to necessity rather than a well timed and well executed exit strategy. But I think this comes down to most people starting/buying a business with great intentions, enthusiasm, plans, etc and giving an exit strategy absolutely no consideration at all. An exit strategy should be considered at the time of starting/buying a business, not when it becomes a necessity.

    If I look at certain franchises, it can cost $300,000-$600,000 to establish a franchise and very rarely can this be recouped upon sale. Hospitality – people throw hundreds of thousands of dollars into opening a swanky, trendy cafe or restaurant with little thought as to what profit they need to generate in order to sell the business at a level that repays their initial investment.

    There is an abundance of information available online for ‘business plans’ and ‘starting a business’. There is about 25% the volume of information available for ‘business exits’ and ‘selling a business’…

    #1223784
    businesstrade
    Participant
    • Total posts: 210
    cameronryan, post: 271230, member: 86268 wrote:
    Hi Felix,

    Yes, unfortunately most businesses do end up selling due to necessity rather than a well timed and well executed exit strategy. But I think this comes down to most people starting/buying a business with great intentions, enthusiasm, plans, etc and giving an exit strategy absolutely no consideration at all. An exit strategy should be considered at the time of starting/buying a business, not when it becomes a necessity.

    If I look at certain franchises, it can cost $300,000-$600,000 to establish a franchise and very rarely can this be recouped upon sale. Hospitality – people throw hundreds of thousands of dollars into opening a swanky, trendy cafe or restaurant with little thought as to what profit they need to generate in order to sell the business at a level that repays their initial investment.

    There is an abundance of information available online for ‘business plans’ and ‘starting a business’. There is about 25% the volume of information available for ‘business exits’ and ‘selling a business’…

    Very true. Most business owners only start planning for an exit when it too late.

    A business is a large investment – not only in money terms but also time, and business owners should definitely have at least some resemblance of a plan to successfully exit in order to maximise their ROI. (Workers have their super, small businesses have their business!)

    Unfortunately, many business owners get caught up in the day to day and don’t end up thinking pragmatically about maximising the value of their asset.

    Felix

    #1223785
    Quennel Powell
    Participant
    • Total posts: 6

    Thank you for such a valuable information. I wanted to ask you what is the best literature to read on behavioral economics, business and marketing. This is important for me, since I study these issues at the academic level. I recently came across some very informative and constructive essays on economics https://writingbros.com/essay-examples/economics/ I’m not only interested in behavioral economics, but also in its impact on technology and the technological development of the world in general. In the second decade of the 21st century, when research and development is carried out in all areas, innovative and improved methods or processes are being introduced, and the amount of knowledge and information in these areas is increasing. It is interesting.

    #1223786
    Mel S
    Member
    • Total posts: 9
    Quennel Powell, post: 271610, member: 119131 wrote:
    Thank you for such a valuable information. I was looking for a long time detailed explanation. Really appreciate your reply!
    Hi Quennel,

    I’m not sure if you were referring to my reply to Nathalie. If you were and you found the info helpful, you’re most welcome. It’s a pleasure to be able to help people. Please let me know if you want more info. Happy to help.

    Many Thanks.
    Mel

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