How to exit the business – Part 1

 

You need to think very carefully before you decide to exit your business.

With all the economic uncertainty and the prospect of low to moderate business growth over the next five years, the idea of getting out is very appealing to many business owners and leaders.  I know it’s not that simple or easy, and needs very careful thought and planning.

1. Is your business ready for sale?

  • Can the business run successfully without you – will it suffer if you are away for more than four months?
  • Has the business been generating growing sales and profits over the past four years?
  • What new rivers of cash are there opening up for the business?

2. What sort of seller are you going to be?

  • How much money do you need to live on for the next twenty plus years?
  • What is the real value of the business? The price/earnings ratio for private companies is far less than publicly quoted ones.
  • Do you want/need to retain a stake in the business to provide you with an income or do you want an outright sale?
  • What do the family think of the idea?

3. Who will buy your business?

  • Will it be a trade sale? – If so, why?
  • Could you do a management buyout and would you leave money in the deal?
  • Have you thought about a private equity and venture capital sale?

4. What are you going to do?

  • After the first few months of travel and adventure how are you going to spend your time? Is playing golf five days a week really going to keep you energised?
  • Is your spouse or partner happy to have you around 24/7 – and how much shopping could you stomach?
  • Do you have a group of like minded friends and associates who will continue to challenge and inspire you?

These are important questions – ignore them at your peril!

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