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11 Reasons to Have the Exit Conversation

When the mention of selling your business comes up, you might feel a little uneasy about starting the discussion. Your business is your baby, and the thought of letting go can be overwhelming. The truth is; however, failing to plan is a plan to fail when it comes to your business exit strategy. You need to have an exit strategy in place for your business. Everyone thinks of their future, but they don’t always take active steps in the present to prepare for what they want tomorrow. There are many reasons why you should discuss when and how to exit your business. Here are eleven reasons to have the exit conversation now:

1) Anything can happen at any time – This is so true. We cannot anticipate what will happen unexpectedly. For this reason, you need to have an emergency exit plan in place. What will you do if you have something happen that requires you to step down from your business quickly?

2) Family obligations are taking more time from the business – Business owners run businesses and have families all the time, but depending on the size of your business and the size of your family, you may need to spend more time away from the business. If you don’t have a team in place that can run the business without you for a few days, exiting might be your best bet.

If obligations, such as an ill family member, or a lot of educational or extracurricular commitments for your children are taking from your time, you could experience a negative shift in the dynamic of your business. A strategic partner can help you free up some time for your family while still allowing you to take an active part in your business’s growth. This type of partnership doesn’t require an immediate exit from your business and allows you to discuss an end-goal for this exit strategy with the partner you join.

3) Personal health issues are pulling you away from the business – When your personal health is in decline, it can be difficult to continue running the business. A business owner doesn’t need the undue stress caused by juggling an illness and the company.

Furthermore, if you find your health declining, or the health of a close loved-one, your priorities might change. Your view on where your time needs to be spent might be more focused on your personal relationships versus constantly working on growing your business.

Again, spending your time away from the business will have a direct negative effect on your revenue and daily operations. This makes the goal of achieving maximum value more challenging. Therefore, having an exit plan is essential.

4) You don’t have anyone in place to take over the business – You’re a great leader, and you run your business like a well-oiled machine. However, what happens when you’re gone? You need to have a plan in place. If you find your children aren’t interested in taking over, or if you don’t have any children, or if you don’t have a manager in place to take over, you need to know what you will do when it’s time to leave your business behind.

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When Do I Tell My Employees I'm Selling?

The thought of selling your business has been on your mind for quite some time, and now you have made the decision to sell. The business is ready to go and you have been working with your advisor to bring in a suitable buyer. The offer comes in and you have signed a letter of intent. The process is in motion, and this is what you have been waiting for, but what about your employees? Your exit plan has been on your mind, but your employees probably haven’t given much thought to what will happen if and when you exit the business. You have a couple options when it comes to sharing the news of your business sale to your employees.

Share Nothing:

Some business owners opt to not share the decision to sell with their employees at all. This option can be viewed as inconsiderate, but it does alleviate the risk of a mass exodus from the company. There are pros and cons to any decision, but not telling your employees right away and keeping information for yourself allows you to keep them from undue stress.

It’s important to protect the integrity of the deal and the company. This means you need to keep details under wraps. If you spill the beans to your employees, there is no guarantee that the information will stay within your company, and it could be concerning for your client base if they catch a whiff of the pending sale.

This doesn’t mean you can’t put things in place to protect your employees through a transition, of course. You just need to pay attention to their needs and ask your advisor what your options are in a sale. If you choose this route, you need to be prepared to extinguish any rumors and answer employee questions the best you can if they notice any changes taking place.

Keep Them in the Loop:

Some owners think the best policy is to be transparent with employees from the outset. The decision to sell has been made, and you are exploring options. So, you want to inform your employees what’s going on. You can be up front with employees and let them know of your plans to sell and your desire to find the right buyer for the company who will instill the same values you hold as a business leader.

This will need to be handled delicately, so your employees will remain comfortable throughout the process. You will need to drive home the initiative that you are doing what is best for the company as a whole and selling the business doesn’t mean the end of the business but rather the growth of the business. It is important to keep the conversation positive, so your employees will get on board with your plans.

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Upcoming Webinar: What to Expect When Selling Your Business

June 26th @ 11:00am EST
Register Now > http://bit.ly/2xZBVU8
 
Selling a business is perhaps the most complex exercise a business owner can undertake in their lifetime. Too often, attorneys, buyers, and others take for granted that the seller has an understanding of the steps, the risks, the timing, and the other aspects of the process. In this webinar we will lay out the key aspects of the sale process from start to finish in a format tailor-made for the uninitiated owner. This will be an entry level discussion requiring no prior deal experience, no legal background, and no knowledge of accounting.  Specifically: 
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Buyside Perspective

As stated on Benchmark International’s website, our perspective makes us different. We strive to help clients reach their maximum value for the sale of their business. To accomplish that goal, it’s important to also have good buyside perspective.

Buyers look at companies differently than sellers and some advisors. Certainly, a company’s financials are a common barometer for both sides to gage a company’s performance and success. And cultural fit is a must. Beyond those metrics; however, buyers prioritize characteristics to mitigate investment risk. These characteristics include, scalability, stability, resiliency, and the ability to grow.

Scalability is about a company’s ability to accommodate growth – to behave as a larger entity. Some acquisitions result in smaller companies becoming part of much larger organizations. The new structure sometimes brings new processes, systems, and reporting requirements. These changes in scale can introduce risk if personnel lack the bandwidth, appetite, skills, or resources to ramp up. Buyers seek assurance that the team is adaptable and capable of scaling.

Many investors also seek stability. The project-based business with wild swings in revenues or heavy seasonality, for example, presents significant challenges in performance, planning, and execution. For most investors, consistency is vital and this is often tied to a company’s revenue model. This is a key reason why buyers prefer recurring revenue models. For industrial services businesses, long-term or preventive maintenance contracts provide recurring revenue. Many equipment manufacturers have transitioned to providing a service rather than hardware. For example, some compressor manufacturers retain the physical asset and provide an “air as a service” guarantee for a monthly fee. And software companies achieve this by transitioning to a subscription, or software as a service (SaaS) model. Together with a “sticky” customer base – high switching costs or risk – these all provide a level of revenue stability that might otherwise be absent.

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I’ve Been Approached by a Buyer, What Do I Do?

You’re sitting at your desk eating your lunch and reviewing the emails in your inbox when your phone rings. You pick up, on the other end of the phone is an inquirer looking to purchase your company. You haven’t given much thought to whether or not you’re open to selling your business, and here is someone who is ready to purchase it right now. What do you do?

Engage the Right Support Team

First things first, congrats! You might not be thinking to sell right now, and that’s okay, but now you know there is interest in your enterprise. If this inquiry has sparked curiosity in you to explore the possibilities of a sale, you need to be prepared. How do you approach an offer for your business out of the blue? Well, you don’t go into it alone, that’s for sure. You need to have the appropriate team in place to assist you should you decide to explore your options. You will need a sell-side mergers and acquisitions specialist to help you navigate the waters of a sale and break down your options for you.

When it comes to selling your business, it’s okay to acknowledge that you don’t know what you don’t know. Having a mergers and acquisitions firm on your side can help you determine what the approximate value of your business is against others in the same market. Furthermore, you can discuss what your aspirations are for your business and what you hope to achieve from a sale.

What Do You Want?

A call that catches you off guard might have you thinking what the buyer’s intentions are, but you need to think about your intentions. If you consider selling your business seriously, what do you want from a sale?

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Things You Need to Know Before You Sell Your Business

Know Why You Want to Sell

What do you plan to do after you sell your business? It’s important to know your purpose for selling, so you can appropriately plan what you want to do after the sale. Are you planning on a total exit, or do you want to stick with the business for a while? There are a few options at your disposal when deciding your reasons for exiting your company. If you are wanting to take a step back, but still want to have some involvement, you can keep a small percentage of the company and transition into a new role with lighter responsibilities after the sale.

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Are you thinking of selling your business? How will you protect your employees?

Your business is your baby, and the people who work for you are your family. A concern of many business owners thinking to sell is how they will care for their employees throughout the sales process.

Download our guide “If I Sell My Business, How Can I Protect my Employees?,” today!

Download Guide

In this guide, you will learn how to best communicate with your employees effectively, how to negotiate on their behalf, how to put their concerns at the forefront of your decisions, and how working alongside them can help alleviate their concerns. 

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You Need an M&A Specialist, Not an Industry Expert

It’s time to dispel the myth that it’s better to use an industry expert versus a mergers and acquisitions expert for the sale of a business. At times, sellers are apprehensive about engaging with a mergers and acquisitions firm that doesn’t specialize in one specific industry, and they say they would rather use an industry expert instead. This isn’t the best strategy for a seller who hopes to gain the most value for his or her business.

The mergers and acquisitions cycle is constantly changing. That’s why it’s important for mergers and acquisitions firms to stay on top of industry trends and stay abreast of any new developments. At Benchmark International, we are M&A professionals who work in all industries. Our business is selling businesses, and we understand the industry specifics.

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Benchmark International expands in Tennessee

Benchmark International is delighted to announce our expansion into Nashville, Tennessee. Nashville has become a hotbed of mergers and acquisitions activity, and it is one of the fastest growing cities in the US.

Additionally, Benchmark International is growing exponentially, with four new regional offices opened domestically and internationally. So, it was only logical for Benchmark International to expand to this territory and be a part of this growing business culture.

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Considering the sale of your business? If so, then the time might be now!

There is still the chance for you to capitalise on the extremely low 10% capital gains tax rates which are on offer via Entrepreneurs’ Relief, whenever you fully or partially sell your company.

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Post-Brexit Benefits for Mergers and Acquisitions

Irrespective of the outcome and the eventual deal Britain strikes with the EU, there will be greater uncertainty for businesses in the near-term.

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The Five Most Common Seller Mistakes in M&A Deals

‘To err is human’, it’s said … but for sellers and buyers alike, the M&A process is surely not a good time to make mistakes.

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To Sell or Not to Sell: The Top Four Reasons Entrepreneurs Choose to Sell

Entrepreneurs, by nature, are people who spend a considerable amount of time looking for the next opportunity. And for them, 'the next opportunity' often includes a suitable time to sell their company.

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