We often ask this question at our exit planning conferences because essentially there are two kinds:
What’s the difference? Potentially millions in the value of your company. Why? Because if you fall into the latter group you are usually being forced to sell because one of the Big Ds has reared its ugly head:
Others that don’t start with “D” include age, illness, loss of a major client, loss of a critical supplier, key employee(s) leaving for the competition, recession, and dozens of other issues that you have little or no control over – how many businesses were lost in New Orleans due to hurricane Katrina in 2005 or in Japan due to the devastating tsunami 2011?
As with most major assets, a fire sale of a business due to unforeseen or unplanned issues can have a huge impact on a business owner’s financial future and potentially impact the legacy that one leaves behind.
We counsel the “plan to sell” method of business exits. Quite simply if you take the time to first build a buyer-ready business (and the steps to do that are outlined in our research paper on this topic) and do your homework and plan for a successful sale, you will optimize your investment.
Far too many business owners view their company as a job. Few actually step back and consider that just like an investment in the stock market, the ownership of a business is, first and foremost, an investment that needs to be nurtured, protected, grown, and eventually sold with an ROI (return on investment) in mind.
Have you ever calculated the ROI you need when you exit your company? Hypothetically, if over the years you have invested $1 million in capital into your company (not to mention the thousands of hours you have spent away from family and friends growing it), what is the return you would need to “pay” yourself adequately when you exit? Is it $2 million? $3 million?
Far too often we encounter business owners that have never done this calculation. Their view of business valuation is essentially “I will take whatever anyone will offer me.” Although this may work out, most often it leaves potentially millions of chips on the table, chips that you may not even be aware of.
Again, I ask you: What kind of business owner are you? Are you taking the time and putting in the effort to grow a financial legacy for yourself and your family OR are you, as we are often told, too darn busy working to even take time to think about planning an exit event?
If you are in this latter group (which studies show about 80% of business owners are in), then you need to attend a Generational Group exit planning seminar. By spending a few hours of your time with our M&A advisors, you will begin your path down a planned, well thought out, methodical exit rather than the opposite.
As a wise man once said: You can leave your business horizontally or vertically – you make the choice!
To learn more about our M&A seminars please visit the following links:
Or, feel free to call us at 877-213-1792 and ask to speak to one of our senior business advisors, or provide us with your contact information and we will reach out to you.
Even if you never attend one of our meetings, please take the time and plan your exit rather than have your exit plan your future.
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2016 Generational Equity, LLC. All Rights Reserved.
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