Without an exit strategy, you may get stuck in a quagmire – where you can’t get out of your business. Why would you intentionally allow yourself to get into that predicament?
At its worst, an exit strategy will help you save face instead of closing the doors and walking away with nothing. At its best, your chosen exit strategy will tie your transition to the achievement of a specific objective worth more to you than the cost of continuing on as CEO.
When you do decide it’s time to move on and you want to ‘cash in’ on the successful prosperous business you’ve worked years to build, here are few quick tips to get started on your exit strategy:
- There is tremendous pressure associated with every step in the sale of a business. Make time to work on the strategic side instead of focusing exclusively on the tactical/operational side.
- To prepare for the sale, start thinking about it early: ideally 2-5 years before you intend to walk away.
- Put yourself in the buyers’ shoes. Recognize what they want, what they need, what they’ll ask for and what they’re looking for.
- Don’t even consider doing this alone. Loners can tell you the best stories about their failures but you don’t need to be one of them. Instead, assemble an integrated team of professionals. An exit strategist can become the virtual partner who facilitates your team of licensed experts to produce a cohesive exit solution.
- Make sure your financials are ‘clean’ and your projections are sound. You want everything in order well before the sale date.
- Prepare the business before you get a professional valuation to enhance the value of the business. This will strengthen your negotiating position with prospective buyers. The analogy is that to sell a home you de-clutter and make it spotless to get the best price, which takes time. The same is true, even more so, for your business.
- Get educated on the process of ‘selling a business’. There are many elements, many options, and many players. You want to be in control of the process.
Many CEOs believe the mythology that they can make the decision and exit the business less than 6 months later. In practicality, it takes 2-5 years for a CEO to fully exit their business. If you try to rush it:
- You reduce your choices
- You eliminate strategic options to grow (top line, bottom line, etc)
- You minimize the value you can get
- You don’t have enough time to think through the integration of personal, professional and business goals
- You may not be satisfied with hastily chosen results
- You may not prepare staff and successors enough for an optimal transfer and transition
- You may not be able to prepare adequately for the tax consequences of your decisions
- You may not be happy with the outcome even if it is on your accelerated timeline
Tame your exit strategy. Start early. Plan ahead.