At some point every business owner will need to exit.

Some wish to spend more time with loved ones, focus on a new venture, or just take their foot off the pedal. Other times, people may have health issues, need more capital or believe a strategic partner could take the business to the next level.

The problem is, when it comes time to transition, many business owners lack a clear process to understand their options and achieve the outcome they deserve.

What’s driving your decision to sell your business? 

The foundation for a successful business exit is to take a sincere and honest look at what is driving your decision. Understanding the ‘why’ will help shape the decisions you will make as you move through the sales process.

People sell their business for a variety of reasons. Here are some key triggers that influence the decision:

Before you commit to taking your business to market, reflect on your current situation and what triggers are driving your decision. Be honest with yourself – if not, you’re more susceptible to making costly mistakes as you progress through the sales process.

Aligning Your Priorities 

It’s a given that any business owner will want the best possible price for their business. But receiving a high sales price may not be your only priority. Other factors may include the urgency of the sale, the future health of the company, and how the business sale will impact your life going forward.

Here are a few scenarios:

These two scenarios show how your motivation impacts both the timing and outcome of a business sale. In the same vein, if an acquirer was to understand the seller’s motivations it may be a key piece of intelligence that would influence how they structure their offer.

Now or later? 

Having time on your side is favourable, as can be seen in the examples. When you have the flexibility to make your business more attractive, you can secure an optimal deal structure. But once again, this depends on your motivation for selling.

To make it easier to understand your motivations, we’ve developed this 2 page checklist. Access the full checklist with additional pages, here.

Take a few minutes to run through it

You’ll see a list of the key triggers for selling (if yours isn’t there, add it to the list). Tick all the ones which apply to you and next to each scenario, decide how soon you need to take action.

What do YOU want to do after you sell your business?

What do you want for your BUSINESS after the sale?

You’ve poured your blood, sweat and tears into the business, it’s only natural to want it to succeed into the future.

Your legacy matters.

Ask yourself what you want for your business after the sale is finalised.

Are any of the following things important to you?

• Your business stays in its current location to reduce any disruption to your clients (and staff)
• You'd like to sell the business to a key employee, family member, or someone you already know and trust
• You'd like to sell your business to a key competitor, supplier, or another business (or deliberately not sell to them)

These answers will impact your ‘go to market’ strategy and the profile of buyers you will be putting the business in front of. Be prepared that saying yes to some of these questions may lead to a smaller pool of potential acquirers for your business.

Although, if you’re happy for whomever acquires your business, to take on the challenge on their terms, then perhaps the above questions are not relevant. This approach certainly provides the largest range of potential buyers and flexibility, but it may require a bit of internal compromise with your motivations to sell your business.

If you are unsure of your motivations, or aren’t quite sure how you’d like to proceed, it’s always worth talking to an exit advisor. They are on hand to present different scenarios to you that you may not have thought about.

Making these decisions now may seem difficult. But they will pay dividends when it comes to proceeding down the sales process. You will come to the negotiations with a sense of confidence, and that confidence will lessen the road bumps that are inevitable in a business sale.

The Key Takeaway

It is important to know your why when you start a business, and it’s just as important to be clear on your why when it comes time to exiting.

“He who has a why can endure any how.” -- Friedrich Nietzsche

The key takeaway is clarity - be crystal clear on your drivers for selling and look at their implications across key areas in a business sale transaction. These drivers will impact everything from your desired sales price, timeline to sell, level of involvement and your legacy post-exit.

Take some time to review our checklist, consider the triggers for selling and the outcomes which are important to you. Once you have established your ‘why’, you will be in the driver's seat to start shaping your own strategy.

Think about these factors before you speak to a broker or an exit advisor, as it can be really empowering as a personal exercise. When it comes time to speak to an expert, you will have a solid foundation for which direction you’d like to take, and they will supplement your decision with a wealth of experience from guiding many other deals over the line. They can build on your personal desires and create a targeted exit strategy which aligns with your selling objectives.

Remember…

We weren’t born to business.

We were born to live life.

Your business should be a vehicle for helping you achieve your personal goals in life.

At Exit Advisory Group, we help entrepreneurs develop growth and exit strategies to maximise their wealth and provide options.

We do this by giving business owners the tools and strategies to design more profitable, efficient and enjoyable businesses to own - that are also less dependent on them. When they choose to exit, they are in the best position to unlock the wealth in their business and be rewarded for their hard work.

If you liked this article we would love you to share it!