314.406.0898


info@clarusadvisors.net

Would an outside party want to buy your business?

Your business provides you with your lifestyle, it is your wealth engine. But the reality is you will not run/own the business forever.  So how are you going to get paid out when you exit? If you plan to die at your desk and shutter the doors you can stop reading now, get a great financial planner and save for your family’s future after you are gone.  If you are planning on transitioning the business to either family or employees, you need to build the systems that will sustain the business after you’ve exited so you can get paid out.  But if you are thinking that you want the large and nearly immediate payday that comes with selling to an outside investor, read on….

A sale to a third-party investor has many advantages; higher cash out, less risk and quicker payout. But, making your business attractive to an investor requires planning and execution over an extended period.  You are going to need operating procedures and financial controls in place.  You will need to show consistent and steady profitable growth, and you need to prove the sustainability of the operations after you are gone. It is a process you need to begin at least three years prior to your desired exit and preferably five years out.

The good news is that by starting the process early, you will not only grow the value of your business, but you will enjoy greater profits and more time… and hopefully less stress.  The process itself is easy, but like any diet or exercise program – the results are in the execution of the plan.  Below are four areas where you need to focus to begin the process.

One – Define your Exit Objectives:

  • How much cash will you need to fund a financially secure post-exit life?
  • When do you want to sell?
  • Are you emotionally ready?

Two – Understand the starting point:

  • What is the current valuation of your enterprise?
  • What is the company’s performance relative to the competitors?
  • What are the value gaps?

Three – The Action Plan:

  • Operating objectives
  • Financial objectives
  • Personnel objectives

Four – The Deal Team:

  • Assemble advisors early in the process
  • Be patient

Selling your company is a stressful event.  Your business had been your life’s work and is deeply entwined in all that you do, it short it’s your baby.  But investors will look at your business with a cold and calculating eye, trying to understand their risks and potential return on their investment.  Trust your deal team, bring them into your business long before you are ready to sell.  Make them an integral part of the planning process and let them run with the sales process.  It will give you greater piece of mind and produce a more favorable return for you.

To learn where some of your company’s strengths and weaknesses are from an outside investors point of view, click on “Find out the value of your business” to take a free survey and find out.

 

Submit a Comment

Building Value: The 5 Keys for Achieving Success

Now Available!

Order Book Online Order Online

"This quick, thorough read is designed to help any sized owner or entrepreneur improve their business and its chances for survival in today’s tough economy." – Dr. Benjamin Ola Akande, Dean of George Herbert Walker School of Business and Technology at Webster University"