The importance of an exit plan
The purpose of an exit plan is to set up the conditions to usher new management in and the old management out. If you don’t have some form of exit strategy you may not have to opportunity to exit on your own terms achieving a orderly sale.
Business sales executed under pressure or panic may not realise the best outcome not only in price but in terms and conditions.
A comprehensive exit plan will include the following components
- What do stakeholders of the business want now and in the future
- What is the realistic method of transfer? These may include:-
Sale to an external party
Staff or management buy out
Transfer of control but not ownership
- At this point it is wise to confirm that the plan so far is agreed and distribute the written plan to all parties.
- Along the way it you may choose to commission an independent business valuation that identifies the risks in the business and how to reduce and minimise those risks in order to enhance the business value.
- Work on projections of future business value to see how it may be increased.
- Ensure you have all the necessary and relevant financials prepared and to hand, including all earnings and personal expenses.
- Identify the key in the business ie staff retention, supply chain etc.
- Prepare a marketing plan
- Implement the marketing pan for the sale
With a steady process behind the sale of your business you may realise 50-100% more for your business than if you didn’t.
If you’re considering selling you business now and haven’t implemented a long term exit plan – simply start one now. Just going through the stages will prepare you far better than a haphazard approach which will just bring pressure and panic.
Your sales professional will also assist you through this process.