So, you are a business owner who is thinking of moving toward retirement. How do you do that? What are your options? How much money do you need to sell your business for, so you can retire? These are all questions you need to fully explore when you’re ready to make this transition.
What Are My Options?
You have a couple options if you are looking to retire. First, you need to decide what your ultimate goal is. Do you want to completely exit the business? Or do you just want to take a step back and pin the majority of the responsibility on someone else? It’s up to you how you want your money to work for you and how much free time you want to have.
Benchmark International’s Managing Director, Clinton Johnston, stated that a business owner can increase the family’s security, de-risk personal exposure to the success of the business, take a step back, free up some time, and bring in another person to help shoulder the burdens of the business in place of a full exit, if that’s what the owner wants. The model he explained was selling 80% of the business and keeping the other 20% and making it work in your favor. He said this allows the owner to continue playing a role in the business part-time and still be able to make a hefty earning. The business owner can consult with a wealth management advisor to learn how to invest the 80% cash and save it to use for retirement, family, charity, whatever the plan or vision may be.
He said the second option is a complete exit from the business. This is when the business owner sells 100% of the business and leaves. He said this option can be completed from engagement to sale to transition out of the business in as little as two years. He said a business owner who is not active in the business can probably complete an exit in as little as a year.
Regardless of the route you decide to take, you will need to sell all or a portion of your business, and you will need to know how to manage your money, so it works for you. Benchmark International’s specialty is selling businesses, and a wealth manager’s specialty is showing business owners how to manage their wealth, so if you are considering an exit from your business, you need to have these conversations early and make sure you plan accordingly to obtain the life goals you have for yourself. You need an exit team in place.
Mergers and Acquisitions
First and foremost, a requirement of having enough money in your nest egg to retire comfortably, and to continue living the lifestyle you know and love, is selling your business for maximum value. Selling your business on your own might sound like a good idea: less money out of your pocket to get out of your business and on to living your life post-retirement.
Managing Director, Clinton Johnston points out that business owners have two choices when selling their businesses. He said, “There are people who will do it slowly on their own and won’t spend much money, but they more than spend that in their time. And then there are people who will go out and get the right lawyers, the right accountants, the right brokers, and they will pay to get the deal done, but it will free up a massive amount of their time.”
Johnston further explains “The reason the second way is better [hiring the right team to help] is because the worst thing you can do in the process of selling your business is get too busy selling your business to actually run your business because buyers are always concerned that the reason you are selling is because you’re concerned that the business is about to fall apart.”
You need to weigh this decision heavily when preparing to sell your business. If getting maximum value for your business and being able to retire and continue living the lifestyle you know and love are important to you, then you really need to use a team of professionals who can help you achieve those goals.
“A lot of people don’t realize all the things they really want to do, and how much it will take to do those things,” he said. Swink said “a lot of times they don’t have the right team of advisors when they sell the business, instead they use the same team they had when they owned the business.” When you are planning to retire and exit your business, an important aspect is to surround yourself with the right experts who have the experience and credentials to serve the unique needs of business owners and their families.
In order to successfully exit your business and also earn enough for retirement, you need to engage with a mergers and acquisitions firm to sell the business, and you need to engage a qualified wealth manager to help with retirement planning. This is how you can ensure you get the most value for your business and learn how you can make the money earned from the sale last for your retirement.
Where you go after you retire depends on your exit strategy. Speaking with mergers and acquisitions specialist, like Benchmark International, to better understand the current M&A market and to learn how you can get the most value for your business is a good place to start.
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $5B across 30 industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 13 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.
WE ARE READY WHEN YOU ARE.
Call Benchmark International today if you are interested in an exit or growth strategy or if you are interested in acquiring.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkCorporate.com
Europe: Carl Settle at +44 (0)161 359 4400 / Settle@BenchmarkCorporate.com
Africa: Anthony McCardle at +2721 300 2055 / McCardle@BenchmarkCorporate.com