Devising a Competitive Exit Plan: Understanding Your Options When Selling Your Business

Are you focusing on one option or exploring multiple options? What does your buying pool look like?

Who are your buyers and what are your options when selling your business?

When selling your business, an advisor can help you locate your buying pool and understand your options. There are many different types of buyers that may be interested in purchasing all or part of your business. You may sell your business to:

  • Your management team
  • Your family
  • An employee stock ownership plan (ESOP) trust
  • A private equity firm
  • A search fund
  • A competitor
  • A supplier
  • A customer
  • Or a private or public company.

Additionally, your business succession planning may include options such as:

  • Keeping the business in the family and retiring,
  • Maintaining ownership of the business and hiring a CEO or relying on the management team
  • Or taking the business public and retiring.

There are many different options available to you when selling your business and most business owners end up choosing a combination of options and buyers. Regardless of your business, it is important to remember that you have many options and an advisor will assist you in exploring these options and finding a solution that works for you and your business.

You will need to talk to multiple buyers to get the deal you want and you should hire a merger and acquisition (M&A) advisor to be efficient with your time. The targeted list of prospective buyers should be strategically developed based upon the likely buyer along with ownership goals for the future of the business. Your advisor should vet the buyer’s capability to buy, access to capital, culture fit, to be tax-friendly and many other considerations.

What steps do you need to take to for your exit strategy?

Staging the buyer/expanding your perspective of value

Most business owners will only sell once in their life. Since they have never sold a business before they might consider gaining more perspective prior to committing to a sale. If you have a longer timeline, consider hiring an advisor to outreach early to prospective buyers to gauge interest in your business along with valuation guidance from the street, to gather further suggestions on how to improve the value of your business, to measure market trends and to get a head start on creating an engaged buying pool.

Decisions will need to be made on the timeline of the outreach and the phases of engaged buyers. Many business owners or brokers will get one offer and push it through without completing the full outreach limiting their ability to reach maximum value. Your leverage as a seller is the strongest while you have clear competition. You will get more value at the end of this process as buyers that want something bad enough may increase their offer very late in the game.

Finishing on your terms while maximizing your profit

Quest is dedicated to helping business owners achieve their business goals and life plans. Once the letter of intent (LOI) is signed our goal is to preserve the deal that both parties are committed to, close timely and maximize the ability to achieve the upside options with clear targets and objectives.

Due diligence can be costly to both sides. An expert advisor can minimize costs by making sure you are prepared with an organized deal room and will manage the diligence process, keeping the CPAs, attorneys and lenders on task which reduces costs and delays.

With regard to taxation, there become several options to mitigate tax-favored investments, tax credit investments, real estate deferral opportunities, and retirement planning options. Quest advisors are experts at helping business owners maximize the value of their business and assisting them in transition to the next stage of their life: hard-earned retirement.

At Quest, we have been in your shoes. Our team owns, has owned, bought, and sold their own businesses. We are experts at helping business owners create succession planning that factors in the most important things in life – your family, your personal life and your hopes and dreams.

Click here to contact us and let’s talk about how we can help make this next phase easier for you.

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