What does a wedding, building a house and exiting a business all have in common? Yes, they’re all monumental moments in someone’s life, but the truth (and real answer) is that all three require extensive preparation and planning for them to end up as ideal as they can be. While I’m sure some of the team members at Tenney Group could provide some tips for a perfect wedding or dream home construction, the real focus of this article is to provide 4 tips to make any business owner’s exit seamless.
Do the Prep Work – There’s no written handbook on when the perfect time to exit a business is. For some owners, their exit may align opportunely with the right time in the industry; for others, it may not. What’s true regardless of the exit date, is that it’s far more complicated than flipping a switch and handing the keys over. Most immediately, when an owner decides they want to sell, the first thing they can do is do the prep work. This means equipping management to handle new responsibilities, spending the funds to have functional and accurate financials, and even something as simple as cleaning and organizing old files (digital and physical). Some of these tasks can be completed within a week while others require months of preparation, regardless, they’re an important precursory step in maximizing value and minimizing the overall sale process timeline.
Envision What Lies Ahead – Whether it’s in the form of a physical vision board or a note on the desk at home, an owner should take the time to clearly define why he/she is looking to exit and what they’re looking forward to on the other side. From desires to build new churches and fire stations to simply spending more time with their spouse and grandchildren, we at Tenney Group have seen it all. Those who keep their post-transaction goals in front of them most often encounter a more seamless exit. Without the goals and ambitions to guide them, owners will feel the unavoidable grind of a sale process far more.
Be Open (To Education) – No one knows more about a business than its owner. Not the advisor, the buyer or the attorney would argue with that fact. As stated above, envisioning life after the company is a healthy practice; what’s not, is being rigid or binary in how you get to that point. The clichés that exist about winding roads, opening new doors, and so on exist because rarely is the path to point A to point B (in this case beginning a sale process and exiting) a straight line. The transaction environment is ever-changing, with buyers producing options that look completely different than others. Whether it be an earnout, stock in the new company, or an all cash deal, there are ways to accomplish an owner’s financial goals while still balancing other non-financial goals.
Rely on the Experts – It cannot be understated how valuable it is to have transaction-experienced professionals involved in a transaction, advocating for a business owner. The same way a patient waiting for open heart surgery would want a cardiothoracic surgeon to perform their surgery, is the same way a business owner should want a transaction specialized attorney and/or tax specialist. What it may cost to retain a specialist is only a fraction of what cost benefits he/she could bring to the table. The same goes with transaction advisors, like us at Tenney Group. It’s invaluable to have a guide that can walk stride for stride with the business owner, all while simultaneously pointing out pitfalls and maneuvering around them.
Ultimately, the sale process is what the business owner wants to make of it and wants to get out of it. Undoubtedly there are cases out there of business owners finding success without retaining any of the four tips above, but that’s likely a minority of all cases. We’ve found that employing even one of the above practices before/during the sale process can not only pay metaphorical dividends, but fiscal ones as well. Just as outlined in the beginning, everyone wants their wedding and dream home construction to go off without a hitch – why should a business exit be any different?
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