Exiting your business? The ten questions you should answer before taking the plunge.
Every business owner at some point has to consider how they are going to exit their business. Preferably the decision to sell will be a voluntary decision with considerable planning for a successful exit. Only a small portion of individually owned businesses pass to another generation, and some never make it to market. They just close their doors. Ideally, there should be an exit plan in place for the sale or divestiture of the business. Especially since the business is generally one of the largest assets in the business owner’s portfolio.
In a perfect situation, the owner(s) have thought ahead, had a valuation done on the business and then planned their timeline, exit planning strategy, and their team for when they go to market.
Before they ever get to that point though, they must ask themselves some very important and critical questions. The answers to these questions can directly affect the decision, timeline and planning to get to that perfect Go To market scenario that helps them reach their goals. The following are XGO’s recommended Exit Readiness questions to ask yourself if you are considering the sale of your business.
- What is your motivation to sell?
- Do you know what you will do after the sale of your business?
- Is your business able to function efficiently and profitably without your presence?
- Will your exit affect any of the operations of the business – will any employees or customers leave, or special vendor relationships, etc. be lost?
- Is management in place for a smooth transition to a new owner?
- Do you have three to five years of clean and easily understandable financials that will convey the true profitability of the business, without an excess of cash flow adjustments to be proven during due diligence?
- Has your business shown a profit in the last three years that would compel a qualified and motivated Purchaser to buy the business? If not, why? Is it because of non-recurring expenses or events?
- What are the strengths of your business? Are they replicable for a new owner / operator or strategic acquirer?
- What are the weaknesses of your business? Can they be addressed prior to a sale?
- Are there growth opportunities for your business, or within your industry that would interest a Buyer?
As you answer these questions, you are going to find that you are prepared for some and some you are not. The next best step to this process is to take these questions, and the subsequent questions they raise in your mind and consult an experienced Business Broker or M&A Advisor who specializes in your industry and market. A seasoned deal maker, who is used to these questions and their implications to the value and sale of your business, can walk you through the answers, what they mean and how to plan for your exit. They can help you determine if you are ready, how to proceed and when the time comes, help you go to market.
XGO Business Brokers and Advisors is made up of a team of M&A Advisors, Growth Strategists, Valuation experts and GO To Market specialists who are ready to assist you in whatever stage of the process you are in.
Contact us today for a Free Needs Assessment.
By Ralana D. Abraham-Miller, Managing Partner
XGO Business Brokers and Advisors
Email: Ralana.abraham@xgoadvisors.com
Phone: 317-245-4912
Book a call with Ralana Abraham-Miller
Ralana is an almost 20-year veteran of the business brokerage industry, with vast experience in marketing and selling small to lower middle market businesses in the Midwestern, US. Ralana has been behind the desk in orchestrating comprehensive confidential go to market strategies as well as in the trenches with her clients as a Business Broker with more than a dozen successful deals to her credit. She is a passionate advocate for the businesses she represents and the entrepreneurs she is privileged to assist. Having been in a family business, she knows first hand the challenges, triumphs and pitfalls a business owner and their family experience.
In her role as Managing Director with XGO Business Brokers and Advisors, Ralana strives to bring that same passion and energy to the brokerage division. This focus and injection of industry expertise coupled with XGO’s legacy of strong customer service, extensive professional network and emphasis on teamwork and support from its parent company GO Services are a winning combination, making XGO truly the GO TO Market Advisory firm.
XGO is a Business Brokerage and M&A Advisory firm focusing on deals in the small to lower middle market range around the country. XGO’s headquarters is located in Carmel, Indiana. With their extensive network of associates, they can provide a range of best-in-class brokerage services throughout the US. If you are considering a sale now or in the future, please feel free to reach out for an exploratory conversation.