Most business owners are focused in the present on building their business. You may be one of them. There is great value, however, in planning what you will do to sell your business – even before you officially launch it.
Many businesses can take years to sell or fail to sell at all. For this reason, and many others, it is important to invest some time and energy into considering proper exit planning and strategies.
In his Forbes article, “How Proper Exit Planning Benefits the Buyer and Seller,” Walker Deibel discusses his interview with John H. Brown, author of Exit Planning: The Definitive Guide. Brown and Deibel both agree that, when properly handled, exit planning can help both the seller and the buyer.
Exit Planning Increases Business Transferability
Exit planning can make a business more transferable. As Deibel points out, when buyers are evaluating businesses, transferability is a key factor. A buyer must feel that he or she can walk into a business, take it over, keep it running effectively, and even grow the business in the future.
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A key aspect of being able to buy a business and having that business be successful is that all relationships from vendors to customers are transferable. A good management team, one that can step in and help a new owner thrive, is a must. Building that team in advance is a savvy move for any business owner seeking to sell his or her business. Concerns on any of these fronts can spell doom for a seller. If a buyer does not believe they can operate a business, they probably shouldn’t be buying it.
Exit Planning Helps Sellers Focus
Great exit planning most definitely benefits the seller as well. As Deibel notes, when sellers engage in exit planning, they realize how much money they need in order to exit. In turn, this forces sellers to become focused and goal oriented. Sellers will take proactive steps to ensure that their business is as appealing to a potential buyer as possible.
Ultimately, proper exit planning is a win-win process – it benefits both buyer and seller. Exit planning can provide sellers with much-needed clarity while simultaneously lowering the overall risk that buyers face.
Buying or selling a business is a multifaceted, and often complex, process. The sooner you begin working with a professional – like a merger and acquisition advisor – the better off you will be in finding the right business for your needs, or in selling the business you presently own. For most people, buying or selling a business is the financial decision of a lifetime. Having a proven, trusted partner who understands all facets of the process is invaluable.