Navigating the exit transition is a natural phase in a company’s life cycle. Yet, it poses a significant challenge for many business owners who struggle to move the decision from contemplation to action. And every delay comes at a cost.
“Did you know that by not having the right exit strategy in place—today—you’re risking not only the wealth your business has created but also your own financial security? Too many entrepreneurs have forfeited millions through unwise divestitures,” says Peter Engel in his book What’s Your Exit Strategy?
While it’s normal to have some reluctance around a decision that could dramatically transform your life, it’s important to balance the apprehension with the potential rewards waiting on the other side. Business owners usually decide to sell for various reasons: retirement of the primary shareholder, increased competitive pressures, financial difficulties, or the intent to liquidate or diversify assets for financial security.
However, for an exit strategy to be truly successful, the decision should be proactive—a choice rather than a compulsion. This way, you’ll have a smooth transition and an optimal outcome from the sale.
Regardless of why you choose to sell the business, reflect on the following questions before you take the leap:
- Are you willing to remain with the company in a transitional managerial role, and for how long?
- Do you wish to retain a financial interest in the business after the sale?
- How do you weigh your priorities? Is the transaction price the ultimate concern, or are other aspects more critical in formulating an exit strategy?
- Is the potential buyer’s identity a significant consideration?
- Is keeping the business within the family a priority?
- Are there specific employees or stakeholders you want to safeguard or reward in the process?
- Do you have a comprehensive grasp of your financial requirements post-sale?
- Is your business equipped with the managerial infrastructure to sustain its future growth?
By answering these questions, you’ll better understand your personal and business needs. This knowledge will shape your exit strategy, leading to a plan that benefits you and your company.
Continue reading to discover the five steps to selling a business, from sales preparation to post-sale experience.
1. The Decision to Sell
2. Preparing a Business for Sale
Have the Right Partner by Your Side
Paramax boasts years of unmatched experience in managing sell-side M&A transactions, from early preparations through negotiations to deal closure. If you’re looking for a partner who’s dedicated to your and your company’s best interests, contact us today.