With a developed exit strategy, you say goodbye to your business on your terms. This is what an exit strategy looks like.
Sell a business is grossly underestimated by most entrepreneurs. Anyone who decides to sell a business today and then expects to be on the golf course like a wealthy man/woman within three months really has to be disappointed. It doesn't work that way. Selling your business is a complex and time-consuming process in which you plan for a successful exit: with an exit strategy.
What is an exit strategy?
An exit strategy is making a plan of how you want to say goodbye to your business. That may sound a bit heavy, but many of the choices up front are going to determine who you sell your business to and how you say goodbye to your business.
An exit strategy has two parts. The first part is about yourself. Why do you want to sell your business, how do you want to say goodbye, within what time frame will you step down and what do you want to achieve with the transfer. The answers to these questions will give you something to hold on to during the sales process. It will also help you prepare yourself emotionally for the sale.
The second part of your exit strategy focuses on your business. How do you work toward your exit, how do you increase the value of your business, and what do you need to do within your business to keep the tax burden as low as possible?
Drawing up exit strategy
A good exit strategy addresses four points.
1. Motives
Why do you want to sell a business? It seems like a simple question, one that is so overlooked. But putting your motives for transferring the business on paper largely determines how you say goodbye and how much time you have for the sale. The list of motives why an entrepreneur wants to sell a business is endless. These reasons can be of a personal or business nature, often prompted by signals from inside or outside the business.
2. Method of sale.
You probably have in the back of your mind that you are going to sell your business completely at once. Just settle down and don't look back. Unfortunately, a full business sale is less and less common these days. Buyers - and their financiers - are increasingly asking if you will remain operationally and/or financially involved in the business.
Your involvement after the sale depends not only on the percentage of shares you sell, but also on the type of buyer and the structure of the deal. For example, an industry stranger MBI'er will want you to show him around after the deal, even if he takes over your entire share package.
3. Timing
Many entrepreneurs considering a business sale wonder what the best time is to put the business on display. Simply put, the best time is when a transfer is not yet necessary. In that situation, you still have plenty of time to set up the right tax and legal structure, prepare your business for sale to create additional value, and find a suitable buyer.
Within what time frame do you want or need to sell your business? That's the question you need to ask yourself. Whether you actually sell your business by this deadline - on your terms - also depends on external factors. Consider, for example, the economic tide, developments in the industry, regional events or the financing climate.
On top of that, choosing the "right timing" is very subjective. The best time for you to sell your business is not always the best time for the business. In the perfect picture, both the entrepreneur and the business are ready to sell, but sometimes you have to choose between when you are ready to transfer or when your business is ready to transfer.
4. Objectives
How do you envision your business sale? Obviously, preferably you want to sell your business in one fell swoop at a pretty good cash price, from which the tax authorities will take as few euros as possible. Moreover, your name should remain on the façade and, if at all possible, your son should remain a sales representative in the business for years after you leave. but in practice, you will probably have to make (considerable) sacrifices.
Therefore, prioritize your objectives. It is an illusion to think that you will achieve all your goals while selling your business. Therefore, decide which goals are most important to you and make a list of the ten most important ones.
Exit Strategy
If you have answered all the preceding questions for yourself, then you already have, in fact, the first draft of an exit strategy. This is because you have identified your rationale and desires for the business transfer. This is an important guide throughout the sales process. Write it down, print it out and re-read it regularly. That way you stay on track and don't lose sight of your goals.
Exit style
There are roughly four leadership styles among entrepreneurs, each with its own distinctive way of saying goodbye to the business.
Monarch
Can't imagine life without his business
Exit style: often forced
General
Biggest frustration is loss of leadership
Exit style: plan return
Ambassador
Knows when his time has come
Exit style: stylish
Governor
Often short jobs as an interim manager
Exit style: voluntary
