by Ken Schaefer
When should a business owner start thinking about planning their exit? Early! This is a high-stakes decision and should not be first contemplated when it is imminent.
We would suggest that the exit assessment and planning begin three years before the planned transiton. It could be compressed to 18 months, if the owner has already done preliminary work on this process. Step back and assess where the company is and where it might be before your planned exit.
With your mergers & acquisition advisor get an idea where the company fits in the marketplace, what the value range might be, and what the value drivers are.
Consult with your financial planner and get an idea how this will mesh with your personal financial plan, and as a team decide how to get where you want to be and what you want to do in your post-work life.
It is wise to start thinking about the business as a financial asset, not the emotional aspects. After all, others will view this as critical. The business is a financial asset, and likely the largest financial asset.
Owners who start early and plan the timetable and steps to get there simply have the most options.
Those options might be an internal sale, a recapitalization, a strategic merger, or a private equity transaction. When an owner waits until the last minute, options are limited and may be limited to a market transaction.
Just as a prudent investor would plan the transference of any financial asset, the privately owned business exit has the best outcome when it is planned and worked towards.
"The entire process went smoothly and professionally. The BTS team kept me fully informed at every step. They worked hard and were effective in bringing the deal home."
"Skip and I continue to be grateful for all you have done to make the sale of Pure Flow come to fruition."
"BTS’s level of expertise in the process and close attention to detail enabled us to successfully navigate the deal."
"These types of transactions are often long and complicated and I doubt it could have been successfully completed without your close ongoing involvement."
"The outside objective point of view that you have brought us has been invaluable as we prepare for the rapid growth."
"John then found the right buyer and coordinated a seamless transition—he doesn’t miss a single detail."
"John immediately identified our strengths and experiences and discussed a business that ultimately was more in line with our goals."
"The BTS team came in, evaluated everything in a professional and thankfully non-threatening manner."
Transition to Freedom explores business transition experiences
Hats off to MJ Schoer for sharing his fascinating multi-level business transition story to a well attended meeting jointly presented by Business Transition Strategies and mPower Advisors.
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Precision Machining Company
Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.
Green Product Company
Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.
Water Purification Company and Young Buyers
Owners decided they wanted to retire. They also wanted to be fair to the staff who had been loyal to them. Could the company be sold, the staff retained and the facility remain in use?
Magnetics Company with High Profile Customers
(T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.