“Create Your Exit Plan: Prepare Today to Sell on Your Terms”
Interested In Selling Your Business? Hello, on behalf of Florida Business Exchange, I would like to welcome you to ‘“Create Your Exit Plan: Prepare Today to Sell on Your Terms”. This is one in a series of videos from Florida Business Exchange that cover the basic steps you will encounter in selling your business.
With the baby-boom generation approaching retirement, it is a well known fact an unusually large number of businesses will be listed for sale over the next decade. The increased supply of businesses could make it more difficult for your business to stand out in the marketplace. Now, more than ever, it is critical for business owners to have their business properly prepared for sale.
In today’s video, we will cover four services offered by FBX to make your business stand out among all other businesses listed for sale and help you sell your business at full value. They are:
The first step in preparing your business for sale is creating an exit plan. An exit plan begins by answering key questions such as…
These three questions are instrumental in creating a sound exit plan.
The first key question is “When do I want to sell?” Whether you plan to sell in 10 years or six months, having an exit plan is necessary. The future is never granted anyone. Many business owners and their families have been harmed by not having a plan in place to protect against illness, death, divorce or other unforeseen events. At FBX, we are happy to work with business owners on exit planning no matter what their desired timing is to sell their business.
The second key question is “Who do I want to sell to?” The decision to sell to family, friends, employees or third parties makes a significant difference in your exit plan. For example, if your exit plan involves a sale to family, you will likely want a lower price and create an on-going consulting agreement to minimize taxes and extract full value. In contrast, if your exit plan involves a third-party sale, you may want to maximize the price and down payment to mitigate your long-term involvement and risk. At FBX, we are skilled at creating scenarios to maximize cash into your pocket from the sale.
The final question is “Why do I want to sell?” Your answer to this question is very important from the buyer’s perspective. Buyers will expect a legitimate reason for selling. Legitimate reasons include retirement, personal reasons such as health or divorce, and finally, the business needs a new owner to take the business to the next level. Other reasons such as, I have a better business opportunity, or I’m burnt out, often leave a buyer thinking maybe this opportunity is not a very good opportunity, or maybe this business will burn me out as well. FBX intermediaries will help guide you in the language you use to communicate your reason for selling.
Whatever your answers to these questions, an exit plan should also include your goals and objectives, contingency plans in case of unforeseen events, and a timetable to help you keep your business properly prepared for sale. Whatever your timetable, contact an FBX intermediary for a free exit planning discussion.
A third-party business valuation prior to a concrete plan to sell may seem premature, however, a detailed business valuation will likely form a key part of your exit plan.
For example, a business valuation will:
Provide a baseline for negotiations at time of sale.
At FBX, we have partnered with a highly credible third-party valuation service. We offer these services starting at $2850. Funds used to purchase a third-party valuation are always credited back against the commissions at time of sale. If you prefer not to purchase a third-party business evaluation, our experienced intermediaries are capable of providing a valuation opinion based on your unique business attributes and historical sales of similar businesses.
Potential buyers greatly value all measures taken to ensure the continuity of people, processes and financial performance of a business after the sale. Often, a buyer will expect ongoing assistance from the seller for a defined period of time to operate the business. By documenting your key business processes, you will likely minimize your required ‘transition effort’ and maximize the conversion of your ‘personal goodwill’ to ‘business goodwill’. In addition, documented business processes have value long before you initiate your plan to sell. For example, they can be used to train new employees, document lessons learned or improvements, and drive consistent, predictable output.
Likely the most important documents a potential buyer will need are the financial records of your business. Businesses with poorly documented or unclear financial records often do not sell or they sell for a significantly discounted price. If you want full value for your business, be sure your business’s financial statements are as ‘clean’ as possible. This will include:
The process of preparing a business for sale is unfortunately something most business owners do not consider until it is far too late. By the time your business is placed for sale there are a limited number options for improving its value. By contrast, good planning and preparation now will ensure you extract maximum value when you decide it is time to exit.
Again. On behalf of Florida Business Exchange, I would like to thank you for listening. If you have any questions regarding preparing your business for sale, please do not hesitate to contact your Florida Business Exchange intermediary for a complimentary consultation. I wish you the best of luck in pursuing your after sale dreams, and having our team of professionals helping you through the process.