As a business owner, an exit plan is critical to preparing you and your company ready for retirement or your next act. Unfortunately, many business owners do not realize the importance of exit strategies, so they don’t feel like it’s worth taking the time to craft one. This is often a huge mistake. It doesn’t matter if you do not plan on selling or retiring soon. However, it’s wise to have an exit strategy for several reasons.
How It Can Benefit You
A well-crafted exit plan can protect your company's value and enhance its future value. It shows that you are an innovative and serious business owner who cares about the company's course even after leaving. A good exit strategy can help you work with your leadership team to create a strategic direction for growth and keep the business following the trajectory of your vision well into the future because it paves the way for a smooth transition for your management team. Exit planning can also help you plan for retirement and generate potential income to be financially prepared. It can also lessen specific tax implications for your estate.
It is also important to note that most of your net worth is likely tied up in your company, making it your most valuable asset. If your business is struggling, an effective exit strategy can help curb your losses. At the same time, if your business is thriving, exit planning can help you maximize that success. It doesn’t matter if you don’t plan on exiting for 20 years from now. In any case, there is no aspect of it that you should take lightly because you want your company to be worth as much as possible at any point in time. You have invested so much in your business. Planning is brilliant because it ensures you can exit on your terms. An exit strategy can also prepare the company for worst-case scenarios that no one is ever ready for, such as illness or death. That is a level of peace of mind that is worth the effort.
Why It’s More Important Than Ever
If the COVID-19 pandemic taught us anything, no one can predict what could happen at any moment. The impacts of lockdowns, social distancing, and supply chain issues swept the global economy and individual businesses. This is why exit planning should be a priority for all business owners in today’s ever-changing world. Being ready for any scenario is just innovative business.
What Are Your Options?
You have several different options for going about creating an exit plan. This includes:
- Selling the business to an outside buyer
- Selling it to an inside buyer, or employees
- Selling part of the business and retaining a partial stake
- Having family take over
- Liquidating the business altogether
The exit planning process will help guide you on which route you decide to take. This is because there are several considerations that you will have to sort through along the way, such as taxes, legal issues, financials, estate planning, operational decisions, and legacy intentions. With so much to account for in such a complicated process, enlisting professional help to create your exit plan is a good idea. If you have an expert in your corner, they will ensure you don’t make costly mistakes and that nothing slips through the cracks. An experienced M&A advisor can help with your exit plan by connecting you with the right buyers, and they will help you maximize your company's value in a sale. Another reason you will find exit-planning specialists helpful is because they take a massive amount of stress out of the process for you.
Many business owners must look at their company from a buyer's perspective to see the value of careful exit planning. Unfortunately, this can cloud reality and result in a loss of value when exiting the business. Realistically understanding your business’s worth is how to extract the most value from it. An M&A expert knows how to see your company the way that a buyer would, how to market it to that perspective, and how to get the highest valuation by creating strategies that drive up value. Of course, these strategies usually take time to realize their full potential, so it is never too soon to begin embarking on the exit planning process. Getting it right can change the future for your company, your retirement, and your legacy.
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Lawrie@BenchmarkIntl.com
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
ABOUT BENCHMARK INTERNATIONAL:
Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $10 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International’s transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the Global M&A Network as well as the #1 Sell-side Exclusive M&A Advisor in the World by Pitchbook’s Global League Tables.