Is it necessary to hire a consultant when planning an exit strategy? My book talks about a six-step process that owners can follow to design an exit plan. What are the steps owners should take in preparation to exit? In most cases, if owners make the investment of time, they will be rewarded for it.
The choice of exit plan can influence business development decisions. This option often results in dismissal of most management in the target company and some consolidation in the ranks.
For instance, are the sales and customer relationships dependent solely on the owner for success? An agreement is struck with the investors, stockholders or lien holders establishing the value of the company.
Ideally, an exit strategy is planned at the outset of a business, although because businesses are so fluid, it can be difficult to know what the final version of the business will look like. If your contribution to the business is so substantial that the company would not have any value without your involvement.
A strategic acquisition, for example, will relieve the founder of his or her ownership responsibilities, but will also mean giving up control. In addition, there is a rather significant psychological barrier to overcome as the thought of not being in a business is akin to a type of death for some owners — particularly after they have run their business for a number of decades.
You may have done such a good job of building a brand that a competitor or conglomerate will see your company as a good fit to its long-term strategy.
These options include private sales, management buyouts, co-owner buyouts, an employee stock ownership plan ESOPand gifting the business to family members. In addition, most owners and their companies have a rather risky and unhealthy co-dependency.
The private capital markets have changed substantially in the past 30 years, offering transfer alternatives that did not even exist when most owners started their companies.
We offer a free customized readiness report for those who are thinking about selling. The employee group will find a way to finance the amount necessary to buy out the interest of the others, thus taking control of the company away from potentially hostile forces.
In other words, the owner depends on the company for income, perks, and a sense of fulfillment, while the company is dependent upon the owner for strategic, operational, financial decision-making authority, and, in most cases, personal guarantees on company liabilities.
For a mature company, the sooner a plan is put in place, the better prepared an owner will be when an exit is available, both personally and professionally.
If you plan to use this option, you must start the planning process almost from inception due to the stringent recordkeeping necessary.Nov 12, · Have you thought about the future of your business, and what your exit strategy will be?
In this article we discuss your exit strategy options/5(7). See 5 ways written Exit Plans help owners and advisors succeed. Exit Planning in general & Exit Planning as BEI Members practice it share one characteristic. Part of the business planning process is the exit strategy -- bailing out of the business at some point before it dies.
3 Business Plans: Exit Strategy. Ask most business owners about their exit strategy, and you're likely to get a blank stare in return.
A business exit strategy is an entrepreneur's strategic plan to sell their ownership in a company to investors or another company.
There are several types of exit plans available to businesses including selling the business, transferring to family members, or having an employee buyout.Download