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Financial Exit Strategies
Selling a business takes just as much planning as building a business.
Entrepreneurs invest thousands of hours when building a successful business. But when it comes time to sell, they often underestimate the complexity of the process and the time required to prepare for a sale. “Selling the business is not for the faint at heart,” advises Alan Marrullier, managing director/capital strategies for Citi Capital Strategies in Tampa. He adds, “It’s never to soon to start preparing.”
In today’s tight capital markets, technology and healthcare businesses continue to be hot acquisition targets, and Marrullier says there’s ample liquidity for deals under $100 million.
• Think Ahead.
Savvy entrepreneurs begin thinking about their exit strategy early — in some cases from the time they start the business. Consider whether you have family members who will want to run the business in the future, whether you’ll sell to an outside party or, perhaps, take the company public.
• Remember Timing.
Don’t wait until you’re ready to retire or need quick cash to think about selling. On average, it takes nine to 12 months to sell a business start to finish, says Marrullier. That’s only allowing 30 to 60 days to find a buyer. The rest of the time is needed for putting together a letter of intent, negotiating, due diligence and other paperwork. Although deals do get done in only 45 to 60 days, that’s the exception.
• Keep Good Records.
“Accounting records need to be absolutely impeccable,” says Marrullier.
• Remember That Price and Terms Work Together.
Owners who want a quick exit from their business or who need more cash upfront will likely have to accept a lower price.
• Focus on Profitability.
“Run the business to maximize profitability” in the last year, advises Marrullier.
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