By Scott Bushkie
Maybe you’re feeling a little burned out or health issues have become a problem. Or maybe you’ve made a commitment to an ever-patient spouse that you will sell the business in time to have an enjoyable retirement.
Whatever the reason for your exit planning, if you’re ready to sell, talk to an advisor. Don’t assume that a down economy makes this a bad time to find new owners.
Instead of making a gut decision that now is or is not the right time, meet with a professional intermediary firm. These advisors have access to national sales data and valuable experience and can give you a fairly accurate idea of how your business will fair on the open market.
Don’t let anyone sell you on selling; just get the facts. There’s no right or wrong decision, as long it’s an informed one.
If now is not the right time for you, use these next few years to prepare and set yourself up with a successful exit plan.
A business intermediary should be willing to work with you several years in advance of a sale. He/she will help you gather a team of advisors with expertise in ownership transitions. The intermediary will also identify value drivers to get the best price in a future sale.
As part of this team, a specialized tax accountant can suggest the best course of action for financial preparation for a sale. Sometimes a normal tax strategy might not give you the best chance of maximizing value in a successful sale.
Likewise, an attorney will review contracts, ownership agreements, intellectual property issues and other legal matters to be sure your business is prepared to sell.
This is also a good time to review your cash flow. Tony Busch of Priora Cash Flow Management is one advisor we recommend. He can help you truly understand where the money is going and identify ways to save dollars and build cash on hand.
As business owners, we all think we know what our expenses are, but a detailed analysis tool like Tony’s can highlight missed opportunities and creeping expenditures. It can also more accurately predict how the business will perform in the future, something both a buyer and lender will look at for financing.
If you’re ready to sell but you and your intermediary determine its best to wait, don’t go back to business as usual. Use this time to your advantage and proactively plan your exit strategy.
You’ll set some short term goals in the process, and that just might give you the energy you need to push through this downturn and come out on top.
Scott Bushkie is President of Cornerstone Business Services, a low-to-middle-market M&A firm. Reach him at 888-608-9138 or [email protected]