Exit Strategy is preparing your business for sale to maximise the value to a prospective buyer.
When should you start your exit strategy?
Ideally from the day you start the business!
I know the last sentence will come as a shock to most business owners and be dismissed out of hand by many. Still, the fact is if you want to optimise the value of your business you should be structuring the business to meet certain criteria from the outset.
This clearly doesn’t happen with most businesses and bad habits and activities become ingrained in the business that devalues the Company – it may be making good profits but the “transferable value”, or its worth to a prospective buyer is not what it could be. Meaning those “good profits” don’t necessarily convert into good value.
At a push, a 5-year preparation will be OK, but anything less than 3 years will result in a reduction in value for sure.
There are 15 Drivers (KPI’s) in your business that impact its value, broken down into 5 separate categories.
Here at NIAGroup, we are happy to share these with you and explain why they are important and if required help you implement them all and dramatically improve Company value.
“Why should I bother, I don’t intend to sell up for years yet,” is a comment we regularly hear, however, we don’t wish to be doom mongers but there is an old adage in our business which is entitled “The Five D’s”.
This refers to five, not common, but definitely frequent occurrences that can impact the value of your business and your ability to stay in control – they are – Divorce, Disease, Death, Disability and Disagreement – any one of which can strike at any time.
If your business is “Exit Ready” you can realise the full value of your hard work, if you aren’t you can kiss goodbye to a major proportion of the value you worked hard for.
The good news is – it isn’t difficult to implement but it does take time.
Exit planning isn’t something you sort out when you decide to get out, it is something you should weave into your business from day one. However, it’s never too late to make a start, every little step will make a difference.
Just one last thought – if you don’t start now, I assure you, a year from now you’ll wish you’d started today!
Call us for a free confidential chat and we’ll explain in detail how important this stuff is and how we can work with you to implement change to add significant value to your business – guaranteed.